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December 14, 1960


Appeals, Nos. 223, 224, and 225, Oct. T., 1960, from order of Pennsylvania Public Utility Commission, Dockets C. 17206, C. 17189, and C. 17203, in case of Scranton Steam Heat Company v. Pennsylvania Public Utility Commission et al. Order reversed and record remanded for entry of appropriate order.


Anthony C. Falvello, with him James E. Riely, Rocco C. Falvello, and Creskoff, Riely & Holton, for appellant.

Miles Warner, Assistant Counsel, with him Louis J. Carter, Assistant Counsel, and Joseph I. Lewis, Chief Counsel, for Pennsylvania Public Utility Commission, appellee.

Morey M. Myers, with him James W. McNulty, for City of Scranton, intervening appellee.

Sheldon Rosenberg, with him Nogi, O'Malley & Harris, for intervening appellee.

Before Gunther, Wright, Woodside, Ervin, Watkins, and Montgomery, JJ. (rhodes, P.j., absent).

Author: Gunther

[ 194 Pa. Super. Page 146]


In this public utility rate proceedings, Scranton Steam Heat Company has appealed from the order of the Public Utility Commission, dated April 28, 1960, rejecting a rate increase proposed by appellant.

On April 28, 1959, appellant filed Supplement No. 8 to Tariff Steam Heat - Pa. P.U.C. No. 1, to become effective July 18 1959, providing for increased annual operating revenue in approximately $171,000.00 (20.16%) based upon the level of operations at February 28, 1959, the cutoff date and end of the test year used in these proceedings. Appellant renders steam heat service to approximately 994 consumers in the downtown section of Scranton, Pennsylvania, having acquired the steam heat facilities from Pennsylvania Power & Light Company, which in turn, had acquired the facilities by merger with Scranton Electirc Company in January, 1956.

Prior to the effective date of the proposed rates, complaints were filed by the City of Scranton on May 13, 1959 (C. 17189), and by Harry Klein, a customer, on June 15, 1959 (C. 17203). By order of the commission dated June 22, 1959, the operation of the proposed supplement was suspended for six months to January 1, 1960, and at the same time, instituted an investigation at C. 17206 for the purpose of determining the fairness, reasonableness and legality of the rates, charges, rules and regulations proposed. By order dated December 21, 1959, operation of the proposed supplement was suspended for an additional three months to April 1, 1960, and a further suspension of one month was agreed to by counsel for all the parties. The proceedings under each of the complaint dockets were consolidated at the first hearing on July 22, 1959. Thereafter, between July 22, 1959 and March 1, 1960, hearings were held on thirteen days,

[ 194 Pa. Super. Page 147]

    compiling 1761 pages of testimony and 64 exhibits submitted by appellant.

During the course of hearings, appellant submitted three measures of value consisting of (1) original cost of construction, (2) reproduction cost at spot prices as of February 28, 1959 and (3) reproduction cost at average prices for five years ending December 31, 1958. The commission disallowed entirely in these computations the claim for cash working capital and reduced the claim for materials and supplies to $230,000.00. Since appellant does not question these modifications on this appeal, the modified measures of value considered as submitted by appellant are as follows:

Reproduction Cost at:

Original Cost: Spot Prices Five Yr. Av.


$2,232,184.00 $5,771,652.00 $4,074,250.00

Appellant company introduced extensive evidence in support of its claims of original cost of its plaint, reproduction cost and accrued depreciation. Rebuttal testimony was introduced on behalf of Harry Klein attempting to show that appellant had under-accured depreciation on its plant and attempting to show that a large part of the plant, including the boilers particularly used for steam production, were no longer used and useful in the public service.

The commission found that appellant's determination of the original cost of construction was arrived at by a routine application of long-accepted law and precedents. However, the commission concluded that it did not consider it "necessary here to weigh and distinguish at length the decisions ... which relate to determination of fair value of utility property in general and original cost in particular." It created its ...

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