Pacific Gas & Elec. Co. v. San Francisco,
265 U.S. 403 (1924)

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U.S. Supreme Court

Pacific Gas & Elec. Co. v. San Francisco, 265 U.S. 403 (1924)

Pacific Gas & Electric Company v. San Francisco

Nos. 34-36

Argued April 17, 1923

Restored to docket for reargument November 27, 1923

Reargued February 19, 1924

Decided June 2, 1924

265 U.S. 403


1. The evidence supports a finding that a net return of 7 percent was necessary to avoid confiscation, in the fixing of the appellant company's gas rates by public authority. P. 265 U. S. 405.

2. In determining the amount deductible for accrued depreciation when valuing the property of a public utility for the purpose of testing the adequacy of rates during a period already elapsed, estimates of competent experts based on examination of the plant subsequent to the depreciation are preferable to averages based on assumed probabilities. P. 265 U. S. 406.

Page 265 U. S. 404

3. Where depreciation is due partly to physical causes and partly to obsolescence resulting from improvements in the plant, the amounts should be found separately if practicable. P. 265 U. S. 406.

4. Ratemaking is not a function of the courts; their duty is to examine results and uphold the guaranties which inhibit the taking under any guise of private property for public use without just compensation. P. 265 U. S. 415.

5. In a suit to enjoin enforcement of rates as confiscatory, a claim of a public utility for past services cannot be relegated to the consideration of a state commission in the future when it adjusts the rates for future years. Id.

6. Where a gas company acquired patent rights which proved very valuable in lessening the cost of producing gas, but necessitated new outlays and rendered parts of the existing plant obsolescent, held:

(a) That the true value of the patent rights, and not merely the money actually paid for them, must be allowed for as part of its property in gauging the adequacy of rates fixed by a city. P. 265 U. S. 41.

(b) As the obsolescence could not have been long anticipated, it was not imperative, if possible, that the company should have provided for it out of the revenues of years preceding those in question. Id.

(c) To allow only the cash paid for the patent rights, and nothing for the obsolete property, in arriving at the rate base resulted in confiscation. Id.

273 F. 937 reversed.

Appeals from decrees of the district court dismissing the bill in three suits brought by the appellant company to prevent the enforcement of ordinances passed by San Francisco in three successive years, to reduce the price of gas.

Page 265 U. S. 405

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