[U.-1834]

IN RE APPLICATION OF THE BRODHEAD TELEPHONE COMPANY FOR AUTHORITY TO INCREASE RATES

Decided April 30, 1920

MEMORANDUM OF DECISION

Applicant, Brodhead Telephone Company, seeks to increase its rates. The present service is full metallic and satisfactory in character, and with the completion of a contemplated purchase of a new switchboard, there will be no ground for complaint.

Revenues. The proposed rates would net an increase in revenues of about $3,666 per year. The fair value of the property for ratemaking purposes is found to be $54,400. The revenues for 1918 fell short of providing 13 per cent of the reproduction cost for depreciation and return by $1,145, and for 1919 they fell short by $1,605.

Past Earnings. Objection is made to the proposed increase on account of high earnings in the past in relation to the outstanding capital stock, which is but $14,900. From 1899 to 1909 no dividends were paid to stockholders, all earnings being reinvested in property and plant. At no time have the earnings on property used and useful been unreasonably high. In view of these circumstances, past earnings cannot be said to have been unreasonable.

Depreciation and Return. While the allowance for depreciation and return is commonly computed on the total cost of reproduction as a measure of investment, the same result is arrived at by the more detailed method of computing, separately, (1) depreciation on the investment cost of the property on a sinking-fund basis, (2) interest on the depreciation reserve invested in property, and (3) interest on the depreciated value of the property.

Revenue Requ'rements. In addition to the $1,605 of deficit already computed, the increases in operators' wages, occasioned by the minimum-wage order, will necessitate $1,318 more, and other wages and salaries will be greater by about $420. The increase in manager's salary from $50 to $125 per month is excessive and has not been provided for in full in these estimates. An adjustment in the tax item will reduce the total of increased revenues needed by $95, making the net total necessary increase $3,238. The proposed rates are, therefore, somewhat high, and the rates authorized will net additional revenues in approximately the amount needed.

ORDER authorizes a schedule providing net monthly rates, excepting for incidental equipment, as follows: Business, main line $2.25, twoparty $1.75; residence, main line $1.75, two-party $1.50, four-party $1.25; rural, $1.50; gross rates in each case being 25 cents additional.

[U.-1868]

IN RE APPLICATION OF THE ANIWA TELEPHONE COMPANY FOR AUTHORITY TO INCREASE RATES

Decided April 30, 1920

MEMORANDUM OF DECISION

Applicant, Aniwa Telephone Company, serving a total of 185 subscribers, seeks an increase in rates. The switchboard is located in a private residence, and long-distance service is provided by connection with the Wisconsin Telephone Company's long-distance lines at WauApplicant also intends to complete in the near future a toll line

sau.

of its own between Birnamwood and Aniwa.

The book value as of December 31, 1919, was $12,728.05, or $68.80 per subscriber, and while this may be somewhat higher than the average, it is reasonable for a plant of this character and size.

Operating revenues for 1919 were $2,817.28, and are probably correct, but expenses reported, $2,821.06, are questionable, and probably did not exceed $2,400, exclusive of depreciation. Allowing for depreciation and return, expenses for the current year will amount to approximately $4,180.

ORDER authorizes the following monthly net rates: Business, oneparty $2.25, two-party $2; residence, one-party $1.75, four-party $1.50; rural business $5.25 per quarter, residence $4.50; business extensions, 60 cents per month, residence extensions, 50 cents; the usual discount rules to apply. The usual installation and moving charges are also authorized.

[U.-1857]

IN RE APPLICATION OF THE ARKANSAW TELEPHONE COMPANY FOR AUTHORITY TO INCREASE RATES

Decided April 30, 1920

MEMORANDUM OF DECISION

Applicant, Arkansaw Telephone Company, seeks to increase its rate from $1 to $1.50 per month gross, payable quarterly, and the non-subscriber charge from 10 cents to 20 cents per call.

Rate Differentials. A uniform rate for all classes of subscribers is sought because business houses have no delivery systems, and for that reason their service is comparable with residence service. No differential between single- or multi-party service is proposed because of the fact that all single-party subscribers are located close to the exchange, and a larger increase, it is believed, would cause the loss of these subscribers. Generally, a differential between the rates charged for single-line subscribers and party-line subscribers, and

also between business and residence subscribers, should be provided, but as the number of subscribers receiving this higher class of service is very few, such differentials are not necessary at the present time.

Revenue Requirements. The book value is $12,675.56. Expenses for 1919, inclusive of taxes and depreciation, were $12.21 per telephone, which is not excessive, and indicates that the present $12 per year rate is insufficient to cover all needs.

Discount and Non-subscriber Charge. The charge of 20 cents for non-subscriber calls is excessive, and the 10-cent rate now effective should remain in force. The rule proposed, which provides that if bills are not paid within the first month following the quarter in which service is rendered, the subscriber's service will be discontinued, is too drastic, and the order will provide for a gross quarterly rate of $4.50, subject to the usual discount provision. ORDER accordingly.

[U.-1983]

IN RE APPLICATION OF THE CITY OF BERLIN, AS A PUBLIC UTILITY, FOR AUTHORITY TO INCREASE ITS WATER RATES

Decided April 30, 1920

MEMORANDUM OF DECISION

Applicant, City of Berlin, seeks to increase its minimum charge for water from $5 to $6 per annum.

Applicant's property is valued at $75,975.42. For the year 1919, applicant's operating revenue was $9,143.13, and expenses, inclusive of depreciation and taxes, were $6,212.70, leaving net operating revenue of $2,930.43. Since non-operating revenues amounted to only $64.89, applicant has earned less than 4 per cent on its investment.

Under the proposed rate revenues will be increased by $225 annually, and coal and labor costs will increase more than that amount. Application granted.

[U.-1855]

IN RE APPLICATION OF THE ORFORDVILLE TELEPHONE COMPANY FOR AUTHORITY TO INCREASE RATES

Decided April 30, 1920

MEMORANDUM OF DECISION

Applicant, Orfordville Telephone Company, serving a total of 509 subscribers, seeks to make effective, among others, the following monthly net rates: Business, one-party $2, two-party $1.75; residence, one-party $1.50, two-party $1.25; rural, party-line service, $1.50.

Accounting for Depreciation. Exclusive of depreciation, operating expenses should be approximately $10 per telephone, or a total expense of $5,090, instead of $4,480.11 estimated for the current year, because, in allowing for depreciation, applicant has made no changes in the book value of the property and plant, but has charged the depreciation reserve with the cost of construction. This would increase the charges to the reserve above normal, as the prices of labor and materials have risen to a marked extent in the last few years. This method amounts really to charging renewals to operating expenses, and the depreciation charge probably includes a portion of the proper maintenance expense, and should be reduced from 9 per cent to 6 per cent.

Revenue Requirements. Applicant's book value is $28,417.84, and in order to earn an 8 per cent return, additional revenue of $1,338 is required. While the rates proposed would produce increased annual revenue of $1,527, they are reasonable for the class of service rendered, and in view of the rapidly changing prices of the various elements entering into the cost of telephone service, it would be unfair to reduce any of the proposed rates.

Application granted; subscribers to be billed quarterly in advance at a rate 50 cents per quarter in excess of the rates granted, which amount will be discounted when bills are paid on or before the 15th of the second month of the quarter.

[U.-1827]

IN RE APPLICATION OF THE MOUNT VERNON TELEPHONE COMPANY FOR AUTHORITY TO INCREASE ITS RATES

Decided April 30, 1920

MEMORANDUM OF DECISION

Applicant, Mount Vernon Telephone Company, seeks to increase its rates 25 cents per month for all classes of service. Exchanges are operated at Mount Vernon, Verona, and New Glarus. The company was organized in 1901, and has capital stock of $5,200 outstanding. The plant has been built up out of earnings, and the book value, which seems to be reasonably stated, is $34,844.13.

Revenue Requirements. An audit of the books shows gross revenues for 1919 of $1,783.83, a return of about 5.25 per cent. The effect of the minimum-wage order and necessary salary increases will be to reduce the gross income to $468, which would fall short by $2,252 of providing an 8 per cent return. The proposed rates would provide increased revenue of $2,589.

Service Requirements. Several circuits are overloaded, with more than 20 subscribers on a single circuit, and there are several branch lines which are not properly maintained. At the time when the 5-cent toll charge on messages to and from Mount Horeb was removed, it was understood that the trunk-line capacity between the exchanges should be increased, but this has not yet been done. When applicant takes action on the increases in rates, the directors should pass and submit to the Commission resolutions covering the correction of service defects.

Proposed Rates. While the proposed rates will produce slightly more revenue than that found to be necessary, they are not unreasonable with improvement in service conditions, and will be authorized, except for the desk telephone differential, which should not be authorized for business service, and should not exceed 15 cents for residence telephones.

Collection of Accounts. Applicant has no regular office, and the treasurer calls individually on the subscribers to collect bil's, for which he receives 41⁄2 per cent of collections. The usual and less expensive method is to require payments at a central office or bank, reserving collections individually for delinquents only. Some arrangement of this sort should be made.

Centralization of Management. A greater centralization of the management would result in many benefits, and should be given serious consideration by the officers.

ORDER authorizes a schedule including the following net rates: Business, $1.75 per month; residence, $1.25; rural, $3.75 per quarter; rural, secret call, $4.50 per quarter; rural, selective, $5.25 per quarter; the gross rates in each case being 25 cents per month additional.