with this Commission pursuant to Chapter 17, Laws of 1937; that by such filings the co-operative has reserved all the territory within which the said line would be constructed; that for a period of 6 months from June 15, 1937 (or for a longer period if the co-operative shall later give the Commission written notice that it has entered into a loan agreement with a Federal agency) the company may not begin construction, operation, or installation of new facilities in the filed territory of the co-operative; and that the portion of the company's application herein for which Commission authorization is required under General Order 2-U-965 must be denied under Section 196.49 (2), Statutes, as amended by Chapter 17, Laws of 1937.

IT IS THEREFORE ORDERED, That Wisconsin Public Service Corporation be and hereby is denied authority for all or any part of the construction described in Finding No. 2.

[2-U-1101]

IN THE MATTER OF THE PROPOSED SALE BY THE VILLAGE OF PLAIN OF ITS MUNICIPAL ELECTRIC-UTILITY PROPERTY TO THE WISCONSIN POWER AND LIGHT COMPANY

Decided August 12, 1937

UPON INVESTIGATION proposal of the village of Plain to sell its electric-utility property to Wisconsin Power and Light Company, the Commission herein found that the interests of the village would not be best served by the proposed sale.

1. Commission-Jurisdiction, Powers, and Duties-Municipal Sale of Utilities-Court Interpretation of Section 66.06(13) (c)

Interpreting its views of "best interests," the Supreme Court points out (193 Wis. 232; 1927) that the Commission in considering the sale of municipal-utility property must find whether or not the proposed sale is of advantage to the municipality, which determination must necessarily include a consideration of plant efficiency, past history, future prospects, rates for and quality of service, future rates and service if plant is sold, and other like matters.

2. Municipal Utilities-Management-State Agencies-Services Technical services of the Commission's staff are available to municipalities at cost under provision of the utility statutes, and the 1937 Legislature created a new state agency which has as one of its express purposes aid to municipalities in solving problems of municipal utility management.

OPINION AND DETERMINATION

Plain, an incorporated village in Sauk County, filed with the Commission on April 22, 1937, a preliminary agreement dated April 13, 1937, for sale of the village electric-utility property to the Wisconsin Power and Light Company. The agreement was submitted to the Commission to determine under Section 66.06 (13) (c), Statutes, whether the interests of the municipality and of the residents thereof would be best served by the sale.

On April 26 the Commission issued a notice of hearing, which was held on May 25 at Madison after completion of an inventory and appraisal of the Plain utility by engineers for the Commission. The appearances were:

Village of Plain, by James H. Hill, Baraboo, attorney; Michael A. Ring, president; Joe Hartl, trustee; Ed Kraemer, trustee; and Jay Samuel Hartt, Madison, engineer.

Plain Water and Light Commission, by J. M. Meyer, Albert Kraemer, Fred Schreiner, and August Hetzel, plant superintendent.

Wisconsin Power and Light Company, by William Ryan, Madison, attorney; and B. E. Miller, Madison, secretary.

Consideration of this matter by the Commission has been delayed by the failure of the village until July 7 to submit exhibits promised at the hearing.

Testimony and exhibits presented at the hearing reveal that the village authorized the preliminary agreement in a resolution adopted unanimously at a regular meeting of the Village Board on April 13, 1937. The resolution contained a summary of the terms proposed in the preliminary agreement, the disposition to be made of the proceeds, and the provisions to be made for the protection of holders of obligations against the electric utility equipment or against the municipality on account of such equipment.

The resolution was duly published by posting in six public places in the village of Plain, more than 10 days before adoption.

The preliminary agreement fixed a price of $35,000 with a provision that if the amount determined by the Public Service Commission of Wisconsin should be larger, the price of sale should be that fixed by the Commission (See, Exhibits 3 and 4; Transcript, pp. 9-11).

In view of these facts, we must conclude that the village has complied with the applicable statute and that the Commission has jurisdiction in this matter. We shall so find.

[1] The Commission's duty under Section 66.06 (13) (c), Statutes, has been set forth by our Supreme Court in Wisconsin Gas and Electric Company v. Fort Atkinson, 193 Wis. 232; 1927. The court said (p. 250):

The commission is required to find whether or not the best interests of the municipality and of the residents will be served by the sale. By "best interests" must be meant whether, upon a consideration of the whole situation, including the degree of efficiency of the plant, its past history, its future prospects, its charges for service, the quality of service rendered, the kind of service the municipality and the residents thereof are likely to receive, the price which the residents will be required to pay therefor, and other like material matters, to say which course will be for the best interests of the municipality and its residents.

Manifestly the commission is not required to pass upon questions of general policy or the respective merits of private as opposed to municipal ownership. That is a matter of public policy and a political question. The legislature has specifically provided that the determination of that issue shall rest with the electorate. . .

The court further interpreted the statute as follows (p. 248):

What is there provided is that before a municipality, which is an agency of the state, may do certain things with respect to property acquired by it in a proprietary capacity, the matter shall be submitted to the railroad commission, an administrative agency of the state, which shall determine whether or not the best interests of the municipality and the residents thereof will be served by the sale, and if the railroad

commission is not of the opinion that the best interests of the municipality and of the residents thereof will be served by a sale the parties have no power to proceed further. The matter is at an end. The reason for the requirement is plain. The railroad commission has a large experience in utility business, a corps of experts at its command, and every facility for passing upon the real merits of the proposal. Local prejudices and jealousies do not enter into its determination.

The court stated also that only when the Commission determines that the interests of the municipality and its residents will be best served by the sale may the Commission proceed to fix the price and other terms of the sale. In 1931 the railroad commission became the Public Service Commission of Wisconsin.

Using the language of the court as our guide, we turn to a consideration of the facts in this proceeding.

As the result of a 43 to 16 vote by Plain electors in November 1922, a $7500 bond issue was floated to help finance the establishment of a municipal electric plant. This issue was dated November 1, 1922, and bears 5 percent interest due semiannually in May and November; $500 of principal matures each November. The balance of an estimated initial cost of $12,000 for the plant was to be defrayed from customer-contributions of $4500.

No customer-contributions are now required under the utility's rules; according to the record, contributions made in earlier years have all been refunded. The rules provide, however, for a $50 connection charge to rural customers. The item of "Contributions for Extensions" in the 1936 balance sheet amounting to $2510 approximately equals the total connection charges under the rule to present rural customers.

About May 1, 1923, the plant began rendering electric service to 60 customers, buying energy at wholesale from the Wisconsin Power and Light Company over a line extending to near Spring Green. The village connected rural customers along the route (see, Exhibit 9). No further bond issues have been floated; and where additional funds have been required, either the Village Board or the Water and Light Commission has obtained temporary loans. The village submitted testimony that some of the obligations

have been retired by direct taxation. Annual reports of the utility in the Commission's files indicate that the village in some early years of the utility paid the $500 of annually maturing principal plus interest, but that in and since 1929 the utility has had a return sufficient to meet bond interest and the $500 of annually maturing principal.

The village has operated as an electric utility and rendered service in parts of the towns of Franklin, Bear Creek, and Spring Green, Sauk County, since prior to August 1, 1931, the effective date of Section 196.49 (1), Statutes, according to the testimony, and therefore may be considered to be legally operating in these towns at the present time.

In April 1933, the wholesale contract for energy expired and was not renewed but continued temporarily in effect until the end of the year. On January 1, 1934, the village utility began operation of its own Diesel-powered generating equipment, which was purchased for $10,260, and requires an annual payment of $1700 for 6 years from date of purchase.

From the latter part of 1932 until April 1935, the utility had temporarily reduced rural rates in effect. In April 1935, the Commission revised and established permanent rates to reduce revenues an estimated $450 a year. The annual reports of the utility show a net return to have been earned first in 1928 with net returns earned in each succeeding year through 1936.

Although deficits occurred in early years, the accumulations available for surplus and appropriations to the general fund in the years 1929-1936, inclusive, amount to nearly $6000, or an average of $750 a year. The 1936 annual report, when adjusted to segregate the water and electric departments, indicates an existing surplus of $2935.33 for the electric department as of December 31, 1936. The difference between the $6000 and the $2935.33 results from a $783 deficit of the water department and appropriations of funds to the village treasury.

With a net operating revenue of $2611.41 in 1936, the electric utility earned slightly more than 7.5 percent on its depreciated book value of $34,781. This latter figure is secured by deducting the book depreciation reserve of $11,526.15 and contributions for extensions of $2510 from