Paul H. Rhoads, Rhoads, Sinon & Reader, Harrisburg, for appellant.
Jack F. Aschinger, Asst. Counsel, Mechanicsburg, Lloyd S. Benjamin, Counsel, Harrisburg, for appellee, Pennsylvania Public Utility Commission.
Alan M. Wolf, Newport, William S. Morrow, New Bloomfield, David Dunlap, Harrisburg, for Borough of Newport, intervening appellee.
Before Rhodes, P. J., and Hirt, Reno, Ross, Gunther and Wright, JJ.
[ 174 Pa. Super. Page 524]
The Newport Home Water Company was incorporated on May 10, 1893, under the Act of April 29, 1874, P. L. 73, 15 P.S. § 1351 et seq. From 1893 to the present time the company has furnished water service to the residents of the Borough of Newport.
On November 6, 1945 the borough elected to acquire the works and property of the water company under authority of clause 7, section 34 of the Act of 1874, supra, 15 P.S. § 1353, which provides as follows: 'It shall be lawful, at any time after twenty years from the introduction of water or gas, as the case may be, into any place as aforesaid, for the town, borough, city or district in which the said company shall be located, to become the owners of said works, and the property of said company, by paying therefor the net cost of erecting and maintaining the same, with interest thereon at the rate of ten per centum per annum, deducting from said interest all dividends theretofore declared.'*fn1 The borough, as required by section 202(g) of the Public Utility Law, 66 P.S. § 1122(g), filed an application with the Public Utility Commission for a certificate of public convenience. The water company filed a protest contending, inter alia, that the price which the borough would be required to pay under the statutory price formula was in excess
[ 174 Pa. Super. Page 525]
of the available assets and the borrowing capacity of the borough.
The commission, after finding the borough's borrowing capacity to be a minimum of $121,857 and that the purchase price under its construction of the statutory price formula would be $109,456.64, granted a certificate of public convenience to the borough, and the company has taken this appeal.
To arrive at a purchase price of $109,456.64, the commission found the 'net cost of erecting and maintaining' the works and property of the Newport Home Water Company to be $98,555.02. Interest at the rate of 10 per cent. per annum on that sum was computed to be $307,415.72; and there was deducted therefrom as 'all dividends theretofore declared' the sum of $299,947.23, leaving a difference of $7,468.49 to be added to the net cost of erecting and maintaining. To the sum of $106,023.51 found as aforesaid, the commission added $3,433.13, representing items which it found would be useful to the borough or easily liquidated by it and which could be liquidated by the company only with difficulty and probable loss to it. The company and the borough are agreed that the method used by the commission in computing interest was correct and that the addition of $3,433.13 to the purchase price was proper.
The water company's most conservative application of the statutory formula results in a purchase price in excess of $414,056.77, that figure having been computed as of June 30, 1950. The considerable difference between the commission price and the company price is, according to the company, the result of the following errors by the commission: (1) refusing to make any allowance for the cost of ...