Georgia Ry. & Power Co. v. Railroad Comm’n, 262 U.S. 625 (1923)

Georgia Railway & Power Company v. Railroad Commission

No. 298

Argued November 29, 1922
Decided June 11, 1923
262 U.S. 625

APPEAL FROM THE DISTRICT COURT OF THE UNITED STATES

FOR THE NORTHERN DISTRICT OF GEORGIA

Syllabus

1. In valuing the physical properties of a public utility corporation as a basis for fixing rates, the present cost of reproduction, less depreciation, is an important element, but not the only element, to be considered. P. 629. Southwestern Bell Telephone Co. v. Public Service Commission, ante,276, distinguished.

2. The value of a gas company’s property for ratemaking purposes does not include the worth of its franchise to use the city streets, amounting to a perpetual permit but not to a monopoly. P. 632.

3. Nor may past losses due to insufficiency of previous rates be capitalized as part of the property on which the fair return is to be based. Id.

4. In such inquiries, the federal corporate income tax is to be treated as an operating charge, to be deducted in arriving at the probable net income. P. 633.

5. Taking into consideration the exemption of dividends from the normal federal income tax payable by stockholders, a rate fixed for a gas company which allows it a return of 7 1/4% held not confiscatory. Id.

6. A decree refusing an interlocutory injunction against enforcement of a rate challenged by a public utility corporation as confiscatory should be affirmed in the absence of any error by the court below other than possible error in prophecy or of judgment in passing upon the evidence, and when the evidence does not compel a conviction that the rate will prove inadequate. P. 634.

278 F. 242 affirmed.

Appeal from a decree of the district court refusing an interlocutory injunction in a suit to enjoin enforcement of a gas rate fixed by the appellee commission.