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October 2, 1956


Appeal, No. 149, April T., 1955, from order of Pennsylvania Public Utility Commission, Docket No. C. 15293, in case of Walter D. Wall v. Pennsylvania Public Utility Commission and Blacktown Telephone Company. Order affirmed.


Walter D. Wall, appellant, in propria persona.

John E. Fullerton, Assistant Counsel, with him Thomas M. Kerrigan, Acting Counsel, for Public Utility Commission, appellee.

Charles E. Thomas, with him Hull, Leiby & Metzger, for telephone company, intervenor.

Before Rhodes, P.j., Hirt, Gunther, Wright, Woodside, Ervin, and Carr, JJ.

Author: Rhodes

[ 182 Pa. Super. Page 38]


This is an appeal by Walter D. Wall from an order of the Pennsylvania Public Utility Commission of April 11, 1955, dismissing his complaint to a proposed increase in rates filed by the Blacktown Telephone Company, intervening appellee. Blacktown is a small telephone company located in the village of Blacktown, Mercer County. It serves 408 customers (378 residential and 30 business) by 416 stations from one magneto exchange. This company was incorporated on December 8, 1908, by a group of individuals for their common benefit. The initial invested capital was $5,000. From 1908 until 1949, when the present management acquired control of the company, there was but little change in its management. During this period its affairs had been conducted in an inefficient and unbusinesslike manner, and there was no real effort to improve or extend the system or to maintain it in a condition suitable for normal and reasonable service. Consequently, in 1949 the company was offered for sale, and the present management assumed control in February, 1950. According to the testimony, the records available to the new management consisted of a stock certificate book, a stock transfer book, the annual minutes of stockholders' meetings, subscribers' ledgers, and a number of annual reports. The voucher records, canceled checks, check books, payroll records, and plant

[ 182 Pa. Super. Page 39]

    account records were apparently never found. The new management inaugurated a program of rehabilitation. Early in 1951 it became apparent that the rehabilitation program required an increase in rates. On May 29, 1951, Blacktown filed supplement No. 1 to Tariff Telephone-Pa. P.U.C. No. 4, providing for rates designed to increase operating revenues by $3,238, or an increase of 27 per cent. The proposed increase was the first since 1921. Wall, one of the multi-party residence subscribers, filed the only complaint to the proposed new rates on July 12, 1951, alleging that the increase in his service rate was unjust an unreasonable.*fn1 His rate was increased from $1.33 per month to $2 per month. Although Wall petitioned for suspension of the new rates, the commission allowed them to become effective on August 1, 1951. After hearings the commission ultimately dismissed Wall's complaint, and he then appealed to this Court.

The basic issue throughout the proceeding was whether the proposed rates were just and reasonable; and the burden of showing that the rates met this test was upon Blacktown. Public Utility Law of May 28, 1937, P.L. 1053, § 312, 66 PS § 1152; Berner v. Pennsylvania Public Utility Commission, 382 Pa. 622, 625, 116 A.2d 738. Ordinarily a utility can adequately prepare to meet its burden by making the necessary expenditures for expert appraisals, and for the preparation of reports, plans, studies, and other data. But Blacktown had an annual income of only $17,000, and it was indicated that to prepare such data would cost about $4,000. Such cost would exceed the requested increase of $3,238. Obviously such an expense, although it might be passed on to the customers or subscribers in the form

[ 182 Pa. Super. Page 40]

    of higher rates, would be unreasonable under the circumstances. Appellant is the only one of the 408 customers to complain. We might dismiss the matter on the ground that his complaints are de minimis, but we shall nevertheless dispose of them on an unsatisfactory record.

Having no records or funds to conduct a full scale study, Blacktown's new management atempted to prove in the usual manner that the proposed rates were just and reasonable. Evidence was presented as to the rate base, the rate of return, annual revenues, annual depreciation, annual expenses, and taxes. To establish the rate base four measures of value were submitted:

(1) "Book cost" depreciated, $20,290; (2) historical cost depreciated, $50,697; (3) reproduction cost new at spot prices of December 31, 1951, depreciated, $66,834; and (4) reproduction cost new at average five year prices, 1947-1951, depreciated, $61,890. No one of these was entirely acceptable to the commission.*fn2 Hence, the commission under the circumstances considered the experience of other small telephone companies comparable to Blacktown. See Pittsburgh v. Pennsylvania Public Utility Commission, 174 Pa. Superior Ct. 4, 9, 98 A.2d 249. The commission ascertained that ...

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