Columbus Gas & Fuel Co. v. Public Util. Comm'n,
292 U.S. 398 (1934)

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U.S. Supreme Court

Columbus Gas & Fuel Co. v. Public Util. Comm'n, 292 U.S. 398 (1934)

Columbus Gas & Fuel Co. v. Public Utilities Commission of Ohio

No. 937

Argued May 1, 2, 1934

Decided May 21, 1934

292 U.S. 398


1. In fixing the rates of a distributing gas company, a state is not bound by the price at which that company purchases its gas supply under a contract with an affiliated gas producing company if it is higher than a fair return to the seller. Dayton Power & Light Co. v. Public Utilities Commission of Ohio, ante, p. 292 U. S. 290. P. 292 U. S. 400.

2. A state cannot constitutionally confine a public utility to a return of 6% upon the value of its rapidly and inevitably wasting assets while withholding from it the privilege of including a depreciation allowance among its operating expenses. P. 292 U. S. 404.

3. In finding the fair price for gas delivered by a producing company, "delay" rentals, paid for keeping alive leases of gas lands held in reserve, should not be charged to operating expenses where sufficient depreciation allowance is made for replacement of operated lands when exhausted. Dayton Power & Light Co. v. Public Utilities Commission of Ohio, ante, p 292 U. S. 290. P. 292 U. S. 40.

4. In computing the rate base, the market or book value of gas lands not presently in use need not be included unless the time for using them is so near that they may be said to have the quality of working capital. P. 292 U. S. 406.

5. In allocating transmission property of a producing gas company, in the process of finding a fair return for gas delivered at one of many cities served by its unit system, it would be arbitrary to employ a formula based on the mileage to the particular city from an intermediate point where gas is compressed, remote from the source of supply, and which took no account of other parts of the unit system. P. 292 U. S. 408.

6. Land and rights of way held rightly omitted in measuring depreciation, no evidence of their location or present or prospective uses having been presented. Pp. 292 U. S. 410-411.

7. Going value of affiliated gas companies, not separately appraised, was in this case reflected in appraisal of the physical assets as parts of an assembled whole. P. 292 U. S. 411.

8. In rejecting the estimates of expert witnesses of going value of affiliated gas supplying corporations, the state commission did not exceed its discretion in the circumstances of this case. P. 292 U. S. 412.

Page 292 U. S. 399

9. The rule de minimis is applicable to trivial differences between opposing estimates of annual depreciation allowance in deciding upon the adequacy of a rate. P. 292 U. S. 413.

10. Under the laws of Ohio, gas companies which sell and deliver supplies of gas to affiliated distributors must serve them at reasonable rates. P. 292 U. S. 414.

11. Insofar as a reasonable rate of a public utility is something other or higher than one not strictly confiscatory, the difference, if any, is determined with finality by the appointed officers of the state. P. 292 U. S. 414.

127 Ohio St. 109, 187 N.E. 7, reversed.

Appeal from a judgment sustaining an order fixing the rates chargeable by the appellant gas company in Columbus, Ohio. The City of Columbus had intervened in the proceedings before the Utilities Commission. The City and company took cross-appeals from the order to the court below. Cf. Dayton Power & Light Co. v. Public Utilities Commission of Ohio, ante, p. 292 U. S. 290. An earlier appeal to this Court was dismissed because the judgment was not final. 291 U.S. 651.

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