Appeal, No. 87, Oct. T., 1954, from order of Pennsylvania Public Utility Commission, Application Docket No. 15845, in case of Clyde E. Berner et al., trading as Valley Planing Mill v. Pennsylvania Public Utility Commission and Commonwealth Telephone Company. Order affirmed.
Arthur H. James, Wilkes-Barre, with him Leroy Long, Hazleton, for appellants.
John E. Fullerton, Assistant Counsel, with him Lloyd S. Benjamin, Counsel, Harrisburg, for Public Utility Commission, appellee.
John C. Kelley, Hull, Leiby & Metzger, Harrisburg, with him Robert J. Doran, Wilkes-Barre, for Commonwealth Telephone Company, intervening appellee.
Before Rhodes, P.j., Hirt, Ross, Gunther, Wright, Woodside and Ervin, JJ.
[ 177 Pa. Super. Page 21]
On November 12, 1952, Commonwealth Telephone Company (hereinafter called Commonwealth) filed proposed new tariffs providing for rate increases for local exchange service. On January 5, 1953, the Pennsylvania Public Utility Commission suspended operation of the proposed rates for a period of six months and instituted an investigation to determine fairness of proposed rates. On June 30, 1953, the suspension was again extended to October 11, 1953, and later, by agreement, extended further to November 10, 1953.
[ 177 Pa. Super. Page 22]
Complaints against the rate increases were filed by Clyde E. Berner et al., at C 15845, Cadwallader Evans, Jr., at C 15852; Bryan A. Breish et al., at C 15858; Jerome B. Marshall at C 15860; Henry L. Jones 2d. at C 15861; C. A. Woodruff at C 15862. The complaints were consolidated for the purpose of the case. Hearings were held between March 10, 1953 and October 16, 1953. Briefs, exhibits and transcript were filed with the Commission on January 9, 1954. After argument, an order was issued approving the proposed rates. This appeal is from the order of the Commission.
Operating revenues under proposed rates.
Does the evidence substantiate the findings of the Commission? Are additional operating revenues under proposed rates properly estimated and justified? The Commission so found. The question before the Court is whether the record supports the Commission's system of estimating the amount to be produced by the proposed higher rates. It is specifically pointed out that the Commission ignored or failed to take into consideration the enormous increase that took place in the number of new subscribers after September 30, 1952, the cut-off date in this case.
It is argued that had the Commission considered this increase the receipts would have resulted in the amount of $1,630,098.00 or $89,000.00 more than the amount actually received by the Commonwealth during the year ending September 30, 1952. It is contended that this was an error of law and that the Commission should have taken account of the increasing number of Commonwealth's subscribers and made a future prediction. The Commission, however, did not ask for a projected estimate by the Commonwealth of increased subscribers and use because that would also have required an estimate of the increased costs, taxes,
[ 177 Pa. Super. Page 23]
etc. In order to annualize the effect of growth of subscribers during the test year, corresponding adjustments should be made for expenses involved in handling the increase.
We see no error in the Commission's methods, which were based on actual experience and geared to the known costs and income. As long as the Commission uses methods reasonably calculated to produce accurate findings, we shall not override its judgment. It may use its judgment in adopting what it considers most reliable, practical, and realistic bases for determining revenues and expenses for rate purposes.
We do not believe that the evidence supports appellants' point that the estimated annual revenues under the proposed rates should be increased by $89,000.00 over and above the amount actually received during the year ending September 30, 1952.
Appellants complain that the operating expenses allowed by the Commission are unreasonable and improper. Should the Commission have disallowed additional expenses? The Commonwealth originally claimed expenses amounting to $933,217.00 but the Commission, in its order, allowed $909,978.00. Appellants object to Commission's allowance of certain payments made by Commonwealth to its affiliated interests. It is pointed out that Sterling Farms, an affiliated company received $3,543.00 for administrative expenses and $2,273.00 as Contractor's profit over and above hourly wage of its farm workers. There is no evidence that the amounts are excessive or unreasonable. Appellants argue that the above amounts of administrative cost should have been disallowed by reason of the fact that another affiliate, the Public Service of Pennsylvania Inc., was receiving a management fee for this very type of service. The record, however,
[ 177 Pa. Super. Page 24]
discloses that the amounts in question were for trimming trees, whereas payments to Public Service were for executive salaries. The Commonwealth otherwise would have to maintain its own tree trimming crew, which is not the ...