the service rendered was directly proportional to the number of days between the respective meter readings and the date of rate change. Rates Changes in Method of apportioning gas bill. Discussion of the method used in apportioning a gas bill covering a period during which a change in rates was made, p. 431. [March 21, 1921.] COMPLAINT that illegal charges were made for gas; complaint partly sustained and order correcting illegal billing issued. By the Commission: This case was submitted to the Commission following hearing, the parties waiving the filing of briefs and the presentation of oral argument. On November 20, 1920, respondent's Tariff P. S. C. Pa. No. 4 became effective, increasing the rates for a gas service in its Jenkintown division. The complaint arises out of the method followed by the respondent in billing for service rendered partly under the new schedule and partly under the prior schedule of rates. The complainants allege that it is illegal to bill a portion of the service rendered between meter readings under one schedule and the remainder under another, contending that all of the meters should have been read on the 20th of November, that respondent's assumption that the service rendered could be prorated was arbitrary and unreasonable and that respondent's application of the two schedules resulted in incorrect and excessive bills. A utility must charge for its service at the rates established in the manner specified by the Public Service Company Law. Respondent has about 8,300 gas meters and about 6,000 electric meters in its Jenkintown division. It uses a method of continuous meter reading, the gas and electric meters being read by the same men, the period of readings extending over somewhat more than three weeks during each month. To have read all of its gas meters on November 20th would have required a force of about fifty-five inen and, for obvious reasons, such a course would have been impracticable and would have served no useful purpose commensurate with the cost, even assuming that the necessary force of meter readers could have been secured. The same problem would have arisen under any other effective date and presents a situation where the rule of reason must be applied. Under the circumstances, it, therefore, became necessary for the respondent to make some apportionment of the service rendered and this it did by assuming that the extent of the service rendered was directly proportional to the number of days between' the respective meter readings and November 20th. Nothing was offered by the respondent to show daily variation in send-out, which would undoubtedly offer a measure of the variation in the average consumption, but such a variation would not necessarily reflect variations in the service for an individual consumer. The Commission is of the opinion that an apportionment on the basis of time is the only practicable method and is one that will work substantial justice, even though it may not be exactly correct for an individual case. Respondent admitted that its method of billing was in error and offered testimony to the effect that it was recomputing the bills for the period questioned preparatory to making adjustments of the various accounts and suitable refunds. Complainants presented a method of computing specific bills, which respondent contends is not correct. Respondent submitted what it now believes to be the correct method of billing, which method is not convincing to the complainant. Complainant's method of computation neglects the need of retaining the proportions and relations of a schedule designed for a monthly basis when applying it to a longer or shorter period of service. It is as much in error and for somewhat similar reasons as is the method first used by the respondent. The Commission is of the opinion and finds that respondent's corrected method is a proper one to employ. Another method, perhaps more readily understood, is illus-' trated by the following solution. Assuming a 5-light meter and a total consumption of 8,300 cubic feet between November 1st and December 3d, the application of the old rates to the total consumption results in a charge of $12.87 or an average of .402 cents per day. The application of the new rates to the same service results in a total charge of $16.19 or an average of .506 cents per day. Since, in this case, nineteen days' service was rendered under the old rates, and thirteen under the new, the proper charge would be computed as follows, the result being the same as obtained by the use of respondent's corrected method. 19 days @ $.402 13 days @ .506 $7.64 6.58 Total ..... $14.22 In any other case the charge would be computed in a similar manner, using the distribution of service as fixed by the meter reading dates and by November 20, 1920. An order will issue sustaining the complaint to the extent noted and directing the respondent, within thirty days to furnish to its consumers corrected bills for the November service and to make suitable refunds or credits for any excess collected as well as for any penalties paid on such excess charges. The Public Service Commission of the Commonwealth of Pennsylvania. 1. The South Dakota Commission excluded from the valuation of a telephone utility, a portion of switchboard investment arbitrarily assigned to rural lines. Return-Operating expenses Deferred maintenance Telephones. Excluded 2. An estimate of operating expenses based upon a period during which an unusual amount of deferred maintenance work had been performed, would be excessively high. Return Operating expenses Rural lines Switchboard expense. 3. The expense of operation of a telephone exchange should not be assigned proportionately to company-owned rural lines, upon a basis of the percentage of the company's rural stations to all stations served, but the separation of the property at the back of the switchboard is proper for rate-making purposes. 4. A return of 6.8 per cent was allowed to a telephone utility rendering poor service. [April 1, 1921.] APPLICATION for increased rural telephone rental rates; increased rates authorized. By the Board: In this case the Dakota Central Telephone Company filed with the Board its application for an increase in its rural party line telephone rental rate upon its rural lines within the Watertown exchange area. Its present rate is $12 per year in advance or $1.50 per month if not paid yearly in advance. In its application, the company did not request any definite increase in rates, nor authority to establish any definite or specific rate; but the Board was asked to fix what in its opinion, after due consideration of all the evidence submitted, it shall consider a fair and reasonable rate. Permission was also asked to put into effect uniformly the discount rule. The matter was heard formally at Watertown. The company appeared by W. C. Rickelhaupt, secretary, Thomas Phalen, superintendent of traffic, and J. C. Johnson, district manager. The application was opposed by a large number of rural subscribers of the company, among whom were the following: T. N. Babcock, W. W. Holmes, G. C. Kellogg, F. H. Patterson, Bert Leonard, V. C. Oles, N. E. Case, A. R. Graves, Ernest Gallimath, Alfred Madison, John Bach, C. N. St. Vlair, and H. C. Tigner. Valuation. The record shows that the applicant company owns and operates a telephone exchange at Watertown and 20 rural partly lines connected therewith, upon which rural lines 211 subscribers were at the time of the hearing, receiving continuous twenty-four hour service. The record also shows that the company furnishes the same service upon a switching basis to 290 subscribers of farm lines not owned by the applicant company. Evidence tending to show the value of the physical property of the company in use and useful in furnishing service to rural party line subscribers upon its lines within the Watertown exchange area, was presented by two different methods: (1) On page 7 of applicant's exhibit 3 is found a statement showing the Watertown rural plant inventory in detail as taken from a general inventory made by the company in 1917. To the quantities of various kinds of materials and equipment shown in this inventory, were applied unit costs based upon the average prices of such equipment and materials during the years 1913, 1914, and 1915. To the total amount so obtained was added the cost of additions to rural plant, including station equipment since the date of the so-called 1917 inventory, the value of such improvements being determined by applying the same unit costs as were used in the original inventory. There was also added 38 per cent of one-sixth of the value of the switchboard in the company's Watertown exchange, as per the 1917 inventory. This last addition was made on the theory that one position or onesixth of the Watertown Exchange switchboard was used exclusively in operating rural lines and that 38 per cent represented the ratio of the company-owned rural stations to the whole number of rural stations served. The total construction or reproduction cost shown by this method is $23,157.68. Such construction cost of the rural plant equipment, exclusive of the assigned item of switchboard investment, is shown to be $18,020.23. (2) On page8 of the same exhibit is a statement showing the reproduction cost of plant and equipment, using the same items and quantities as in the above estimate and applying thereto unit costs based upon prices current at or shortly before the date of the hearing. A total present reproduction cost of $36,361.94 is thus shown. Such cost less the switchboard investment would be $26,426.52. No evidence was offered either as to the record cost or as to the depreciated or present value of the plant and equipment, but the testimony is to the effect that the greater part of the rural plant was constructed during the years 1913, 1914 and 1915, and that the condition of the entire Watertown plant at the date of the hearing was about 90 per cent. [1] After a careful consideration of all of the evidence, the Board is of the opinion and finds that the fair value of the plant and equipment of the applicant company, exclusive of the portion of switchboard investment arbitrarily assigned to the rural lines, in use and useful in furnishing rural party line service within the Watertown exchange area, was at the date of the hearing $16,000, and such valuation is approved for the purposes of this case only. Operating Expenses. On page 5 of applicant's exhibit 3 is a statement purporting to show operating expenses of the company's rural lines within the Watertown area for a period of six months ended June 30, 1920. The expenses thus shown are used as a basis for the company's estimate of future annual operating expenses. The average |