REPORTS

ANNOTATED

PENNSYLVANIA PUBLIC SERVICE COMMISSION.

MOUNT UNION et al.

v.

MOUNT UNION WATER COMPANY.

[Complaint Docket No. 271.]

Rates - Power to increase - Franchise ordinance — Indefiniteness. An advance of the rates of a public utility may be made although the franchise ordinance provides, among other things, that the municipality shall have the right to purchase the utility at specified times, and that the annual rates to private consumers shall not exceed those specified therein, since, in this form, the contract is indeterminate and uncertain in length of time, so that the company is not bound to maintain the rates therein provided for.

Rates of a water company producing a return of 5.84 per cent upon complainant's own valuation, or less than the annual rate of interest, do not justify a finding that such rates are unreasonable and excessive, especially in view of other testimony bearing directly or indirectly upon the question of rates tending to show a lower rate of gain than complainant's figures indicate.

[May 20, 1915.]

COMPLAINT that the Mount Union Water Company had filed and published a tariff by which its rates were increased in violation of the terms of the ordinance under which it was operating, that the rates were unreasonable and excessive, and that the serv

ice was insufficient and inadequate; complaint as to rates dis missed; finding that the quantity of water supplied by respondent is adequate and sufficient for domestic consumption, but company ordered properly to protect water against pollution and contamination and to report to the Commission at a specified date the scope and character of the means employed to safeguard the purity of the water. Pressure tests ordered to be made and reported to Commission.

Appearances: Charles E. Hower and James S. Woods for the complainant; Thomas F. Bailey and Samuel I. Spyker for the respondent.

Brecht, Commissioner: In its original form and as subsequently amended, the complaint of the borough of Mount Union against the Mount Union Water Company sets forth that in a schedule of rates issued July 1, 1914, effective August 15, 1914, the respondent company increased its rates; that the proposed rates are in violation of the terms of the ordinance under which respondent is permitted to operate a water plant in the municipality of Mount Union; that the rates under the new schedule are unreasonable and excessive; that the "water supply furnished

is insufficient in amount and deficient in quality;" and that the supply of water furnished by respondent to the borough of Mount Union is not "adequate in pressure or amount for the protection of said borough from fires."

It appears from the record that on July 27, 1900, a franchise was granted to Edgar B. Kay, his associates or assigns, to construct and operate a plant to supply water to the inhabitants of Mount Union. The respondent in this proceeding, the Mount Union Water Company, is the successor under the above ordinance to Edgar B. Kay, his associates, or assigns. The ordinance, among other things, specified that at the end of ten years after the water is installed, the borough authorities shall be empowered to purchase the waterworks, if satisfactory terms can be agreed upon, and in case the purchase is not then made, the right to buy shall inure to the said borough every five years thereafter; that the annual rates to private consumers shall not exceed the schedule of rates which are set forth in detail in § 16 of the said ordinance; and that the water pressure is "to be sufficient to throw a

stream 90 feet high at the crossing of Jefferson and Market streets, when tested through a 23-inch hose, 50 feet long, attached to a hydrant and having fitted to it a 1-inch nozzle.”

In the answer of the respondent it is averred that the rates fixed in its schedule of July 1, 1914, are not unreasonable and excessive; that the value of "the plant and property of all sorts of the Mount Union Water Company is $140,000, and that at the rates fixed by schedule of July 1, 1914, the gross annual income will be $11,000, that the annual cost of operation," including state tax, annual depreciation of 1 per cent on the value of the property, amounts to $5,610, "leaving a net return upon the value of the plant fixed at $140,000 of $4,390, or 3.14 per cent upon the investment;" that the franchise which the borough had granted to Edgar B. Kay and his assigns was not limited to ten years or any other definite period of time, but was "indeterminate and uncertain" as to the length of time the contractual relations of the parties would remain in effect; that the respondent “is under no legal liability under the franchise contained in the ordinance of the 27th of July, 1900, to maintain the schedule of rates fixed therein, provided such rates do not furnish an adequate return to the company based upon the value of its plant, for the reason that the contract as to the said rates

is unlimited as to time, and is coextensive with the grant,

," that the water furnished to the borough of Mount Union is "sufficient in quantity and reasonably pure in quality," and that the pressure of water for "fire protection is fully sufficient and adequate."

There are four questions raised in this issue: (1) Is the advance made in the rates of the schedule of July 1, 1914, effective August 15, 1914, a violation of the ordinance of July 27, 1900? (2) Are the rates of the aforesaid schedule unreasonable and excessive? (3) Is the supply of water furnished to the borough of Mount Union insufficient in quantity and inferior in quality? (4) Is the water pressure not adequate and sufficient to afford proper fire protection to the said borough?

(1) Was it a violation of the ordinance to increase the rates? It is admitted by counsel of complainant that if the contract ordinance of July 27, 1900, is perpetual, then under the ruling of the supreme court in Bellevue v. Ohio Valley Water Co. 245 Pa.