sufficient or unjustly discriminatory, inadequate or otherwise in violation of this act; and shall make such other order respecting the same as shall be just and reasonable.

The Company being merely a distributor of natural gas, therefore the element of exhaustion of wells and depletion of territory are not to be considered, and for that reason the rate of depreciation should be lower than in a case where the utility is engaged in the production of and distribution of gas. Re Light Fuel & Power Co. etc., Bul. No. 39.

An allowance of 28% for depreciation is a fair charge against the property in view of the fact that a large part of the plant had been constructed during the past seven or eight years. Re The W. Va. Central Gas Co., Bul. No. 40.

A straight percentage deprecation of 15 per cent to be subtracted from the several elements composing the value of applicant's physical property, including the allowance for overhead and going value, but excluding the allowance for working capital, is a proper allowance in this case for accrued depreciation. Re United Fuel Gas Co., Bul. No. 43.

RATE MAKING VALUATION-METHODS OF ASCERTAINING

Among the evidences of the value of property of a public utility, no one of which is conclusive, butwhich should have proper weight with the commission in making its estimate of the fair value of the property, are original cost to date, cost of reproduction new, cost of reproduction less depreciation sale value of the plant under normal conditions market value of stocks and bonds of the utility, earning capacity of the property and the return made by the utility for purposes of taxation. Re Charles Town Water Co., Bul. No. 9; Bien. Rep. 1915-16, p. 84; P. U. R. 1916D-725.

Upon the question of the rate making value of natural gas lease-holds, evidence of the assessed value of those and similar leaseholds is relevant, but it is not ordinarily entitled to great weight Re Clarksburg Light and Heat Co., Bul. No. 18; 1917 An. Rep. 53; P. U. R. 1917A-577.

The peculiar and transitory nature of a natural gas system does not justify taking only the actual investment as the rate-making value; nor should such value be limited by the investment, since the utility is entitled to the increase from developing undeveloped or partially developed territory. Re Clarksburg Light & Heat Co., Bul. No. 18; 1917 An. Rep. 53; P. U. R. 1917A-577. Wilcox v. Consol. Gas Co., 212 U. S. 41.

The rate-making value of a utility cannot be determined solely by the reproduction cost less depreciation plus appreciation, since the amount so determined is merely one of the elements which may be considered. Re Clarksburg Light and Heat Co., Bul. No. 18; 1917 An. Rep. 53; P. U. R 1917A-577.

Knoxville v. Knox Water Co., 212 U. S. 1; Re San Jose Water Co. (Cal.) P. U. R. 1915E-706; Re Janesville Water Co., P. U. R. 1915A-178.

Cases on question of value cited in Clarksburg L. & H. Co., Bul. No. 18, 1917 An. Rep. 53, P. U. R. 1917A-577. Lincoln Gas & E. Co. v. Lincoln, 223 U. S. 349; San Diego Land & Town Co. v. Jasper, 189 U. S. 439; Cov. & L. Turnpike Road Co. v. Sandford, 164 U. S. 578.

A commission is justified in assuming that the actual investment, as shown by the books of a public utility, is the present value for rate-making purposes, where it appears that the amount invested is not denied by protestants; that the actual value, as far as the evidence shows, is much higher and that the amount of the investment is somewhat less than the value reported for the purposes of taxation. Re United Fuel Gas Co., Bul. No. 21; 1917 An. Rep. 80; P. U. R. 1917A923.

A commission is justified in assuming that the actual investment, as shown by the books of a public utility, is the present value for rate-making purposes, where it appears that the amount invested is not denied by protestants; that the actual value, as far as the evidence shows, is much higher; and that the amount of the investment is somewhat less than the value reported for the purposes of taxation. Re United Fuel Gas Co., Bul. No. 21; 1917 An. Rep. 80; P. U. R. 1917A-923. The assessed value of railroad property for taxation was, in the absence of other evidence of value, taken as the rate-making value, the law requiring property to be assessed at its true and actual value. Re C. & O. Ry. Co., Bul. No. 30; 1917 An. Rep. 240; P. U. R. 1917D-152.

The net investment as shown by the company's books furnishes the best method of valuation for rate making where the records of the company have been well kept and preserved. Re Bluefield v. Bluefield Water Works & Imp. Co., Bul. No. 31; 1917 An. Rep. 197; P. U. R. 1917E-22. The investment plus deficits basis of valuation which is predicated on the theory that a public utility is entitled to earn a fair return on the amount of capital invested in its utility, and, in the event it fails to so realize such return, the difference between what it would be reasonably presumed to be entitled to earn and the amount which it did actually earn, should be added to the amount it had invested in its property used and useful in the public service, is objectionable, for the reason that it deals exclusively with the past history of the company, rather than the present and the future. Re Bluefield v. Bluefield Waterworks & Imp. Co., Bul. No. 31; 1917 An. Rep. 197; P. U. R. 1917E-22.

In arriving at the value of the different items constituting applicant's plant, the commision considered original, reproduction cost and present value. Re The W. Va. Tract. & Elec. Co., Bul. No. 34.

In view of the extremely liberal manner in which the stocks of this company and its predecessor have been issued and distributed as dividends and bonuses, without adding any actual value to the properties of the applicant and its predecessor, it is obvious that in this particular case this element of value is not worthy of serious consideration in ascertaining value of applicant's property as basis for rate making. Re Huntington Development and Gas Co., Bul. No. 38.

On account of abnormal conditions resulting in the prevailing high prices of labor and material the reproduction value of applicant's plant, based upon present day prices, is not to be regarded in arriving at the value of said plant. Re Light, Fuel & Power Co. & Gassaway Gas Co., Bul. No. 39. While it is proper to consider the return of a utility made by its. officers to the Board of Public Works for assessment purposes as evidence in a case, the commission does not feel that the utility should be precluded from showing that its property was of greater value than that represented by said return. Re The W. Va. Central Gas Co., Bul. No. 40.

If any public service corporation, or other person, shall fail or refuse to comply with the order of the commission under the provisions of the last two sections, such public service corporation or other person in addition to the other penalties provided for in this act, shall be subject to a fine not to exceed five thousand dollars. (Acts of 1915, chap. 8.)

Sec. 24. Whenever, after hearing upon notice, the public service commission shall determine that public convenience or necessity requires that conduits, subways, poles or other equipment on, over or under any street or highway belonging to or used by any public service corporation, should be used in part by another public service corporation for the operation of its property in any locality not reached by the lines or connections of one of said corporations, or a municipality, the said public service commission may, by order, fix the just and reasonable terms and conditions of such use, and prescribe the compensation to be paid therefor.

And, whenever, after hearing upon notice, the public service commission shall determine that public convenience and necessity require a physical connection for the establishment of a continuous line of communication between any two or more public service corporations regularly engaged in the conveyance of telephone or telegraph messages, for the conveyance of such messages between different localities, which are not reached by the lines or connection of one of said companies, the said public service commission may, by order, ascertain, determine and fix the just and reasonable terms and conditions of such physical connection, including just and reasonable rules and regulations and the just and reasonable charge that shall be made to the public for the use of such continuous line between such localities and the division of the charge between such two or more public service corporations, and the apportionment of the cost of making such physical connection between such public service corporations, and it shall be the duty of such public service corporation thereafter to conform to such order of said public service commission. But no order shall be made by the public service commission under this section to apply where the said use or physical connection will prevent those owning, operating, managing or con

VALUATION-NON-PHYSICAL ELEMENTS AFFECTING VALUE

In a rate valuation of a natural gas company, no allowance should be made for overhead charges for promotion, organization, legal engineering, interest, lease rentals, taxes during construction, superintendence and contingencies, where the expense of the original organization which consisted merely in the merger of two competing companies, is not disclosed, and where all subsequent expenses, including all operating costs and expenses, have been paid out of revenue leaving large dividends on the actual investment and ample dividends on the value of the property. Clarksburg Light & Heat Co., Bul. No. 18; 1917 An. Rep. 53; P. U. R. 1917A-577.

Overhead Charges" allowed in Rate Cases. Des Moines Gas Co. v. Des Moines, 238 U. S. 153; Buffalo Gas Co. v. Buffalo, 3 P. S. C. R. (N. Y. 2nd Dist.) 553.

An allowance to cover omissions, emergencies, superintendence, etc., usually termed "overhead expenses," is not an improper allowance in this particular case. Re The W. Va. Trac. & Elec. Co., Bul. No. 34.

No allowance should be made for "overhead charges," where the plant is not valued on the reproduction theory alone, and where the plant, in a large measure, was constructed and developed under the supervision and management of a parent or holding company's officers, whose salaries have been paid by the consumers as a part of the cost of operation. Re The West Va. Central Gas Co., Bul. No. 40.

The reasons assigned for an allowance for overhead charges are not so obvious when based upon actual investment cost as when based upon reproduction cost new. Re United Fuel Gas Co., Bul. No. 43.

Ten per cent of the actual investment in the physical property is a liberal allowance for overhead expenses, where the properties when acquired by applicant were live going concerns and had passed the period within which the cost of management, engineering, interest during construction, taxes and insurance and other unforeseen expenditures would not be reflected upon the books of the company as a charge to capital or to operating expense, but might be justly inferred to have been largely, if not entirely added to the actual investment cost of these properties and included in the purchase price, and since which time all expenditures of this character have either been paid from operating revenues or charged to capital account. Re United Fuel Gas Co., Bul. No. 43.

trolling, any part of such conduits, subways, polls or other equipment, or such proposed continuous lines of communication, from performing their public duties, nor result in serious injury to those owning, operating, managing or controlling, any part of such conduits, subways, polls or other equipment or of the proposed continuous line of communication. (Acts of 1915, chap. 8.)

Sec. 25. Such use so ordered shall be permitted and such physical.connection or connections so ordered shall be made; and the terms, conditions and compensation so prescribed for such use and such physical connection shall be the lawful conditions and compensation for such use and physical connection, and the lawful terms and conditions upon which such use and physical connections shall be had and made. Any such order may be from time to time revised by the commission upon application of any interested party or upon its own motion. (Acts of 1915, chap. 8.)

Sec. 26. The commission may establish a system of accounts to be kept by public service corporations or classify said public service corporations and establish a system of accounts for each class, and prescribe the manner in which such accounts shall be kept. It may also in its discretion prescribe the forms of accounts, records and memorandum to be kept by such public service corporations, including the accounts, records and memorandum of the movement of traffic as well as the receipt and expenditure of moneys, and any other forms, records and memorandum which in the judgment of the commission may be necessary to carry out any of the provisions of this act.

VALUATION-ADDITIONS AND BETTERMENTS

The amount which a natural gas company anticipated expending in the near future in the improvement of its plant should not be taken into consideration in a present adjustment of rates. Re Glenville Natural Gas Co., Bul. No. 6; Bien. Rep. 1915-16, p. 120; P. U. R. 1915F-848.

Items of machinery and other equipment necessary and needed for improvement and betterment of the service, and real estate for the purpose of installing a settling or filtering system, were allowed in fixing a value for applicant's property though purchased after application for increase was filed. Re West End Water Co., Bul. 26; 1917 An. Rep. 121.

Where improvements are necessary, and must be made at once, some consideration should be given the fact in considering the value of the plant. Re Buckhannon L. & W. Co., Bul. No. 27; 1917 An. Rep. 218.

In considering the value of a water plant, it is the better practice to wait until the improvements have been actually made and then, on proper application, so adjust the rates as to allow for a proper earning on the amount to be expended in making the improvement. Re Buckhannon L. & W. Co. Co., Bul. No. 27; 1917 An. Rep. 218.

Re Glenville Natural Gas Co., Bul. No. 6, Bien. Rep. 1915-16, p. 120, P. U. R. 1915F-848.

VALUATION-INCOMPLETE CONSTRUCTION

Capitalization of the value of incomplete construction before the same becomes a useful element in the public service, would require applicant's consumers to pay a fair return upon the investment as well as interest upon money going into the same. Re United Fuel Gas Co., Bul. No. 43. "Incomplete construction" and unfinished transmission lines, in process of construction at the time application was made, but which have since been completed and now in use constitute a part of the present value of applicant's property and must be considered in fixing a fair rate base. Re United Fuel Gas Co., Bul. No. 43.

VALUATION-PROPERTY NOT USED OR USEFUL

A valuation for rate purposes of a building owned by a water utility which included parts which were not used for the utility's purposes and for its service was held by the commission to be excessive. Re Charles Town Water Co., Bul. No. 9; Bien. Rep. 1915-16, p. 84; P. U. R. 1916D-725. The commission did not take into consideration the cost of construction of a gasoline plant, for the reason that there is nothing in the case to definitely show what the result of this investment will be. Re Huntington Development and Gas Co., Bul. No. 38.

Gasoline, as a by-product of natural gas is not analogous to coal tar and coke, by-products arising from the manufacture of artificial gas, since the manufacture of these by-products are an essential part of the process by which the artificial gas is produced. Re United Fuel Gas Co,. Bul. No. 43.

The only correct method of treating the matter of the manufacture of gasoline from the gas of a public utility is to credit to the production expense, and such part of the transmission expense as may be proper, the fair value of the use of the gas production per unit of volume used in the process of the manufacture of gasoline. Re United Fuel Gas Co., Bul. No. 43.

The reasonable value of the use of gas for the manufacture of gasoline, is the measure of the earnings from that source that should be properly credited to production and transmission expense

The system of accounts established by the commission and the form of accounts, records and memorandum prescribed by it shall not be inconsistent in the case of corporations subject to the provisions of the act of congress entitled “An act to regulate commerce," approved February 4th, 1887, and the acts amendatory thereof and supplemental thereto, with the system and forms from time to time established for such corporations by the Interstate Commerce Commission, but nothing herein contained shall affect the power of the commission to prescribe forms of accounts, records and memorandum covering information in addition to that required by the Interstate Commerce Commission. The commission may, after hearing had upon its own motion or upon complaint, prescribe by order the accounts in which particular outlays and receipts shall be entered, charged or credited.

Any person, officer, agent or employee of such public service corporation who shall wilfully make any false entries in the accounts, books of account, records or memorandum kept by any public service corporation, or who shall wilfully destroy, mutilate, alter or by any other means or device falsify the record of any such account, book of accounts, record or memorandum, or who shall wilfully neglect or fail to make full, true and correct entries of or in such account, book of accounts, record or memorandum of all the facts and transactions apper

and a gas utility should not be permitted to sell the use of its gas to itself for a private enterprise for less than its fair market value. Re United Fuel Gas Co., Bul. No. 43.

Measured upon the basis of net earnings from gasoline production, the value of the privilege of using applicant's gas for the production and extraction of gasoline is equal at the least to onehalf of the net profits arising out of the business, and the earnings from this source should be properly credited to applicant's production and transmission expense. Re United Fuel Gas Co., Bul. No. 43.

VALUATION-PROPERTY PAID FOR OUT OF EARNINGS

Cases cited in Clarksburg L. & H. Company; Grafton Co. Electric L. & P. Co. v. State, 77 N. H. 539; Charles Worth v. Omar Electric Light Co. (Wis.) P. U. R. 1915B-1.

VALUATION-LANDS AND LEASEHOLDS

Great weight will not be given the testimony of the utility's engineer as to the value of natural gas leaseholds, based upon the value of similar adjacent property, where his only knowledge of the territory is a general knowledge of the gas business and information obtained during a short time in making his inventory and appraisal of the system; but great weight will be given his value of wells where based on a five-year average cost of materials and labor from the company's books. Clarksburg Light & Heat Co., Bul. No. 18; 1917 An. Rep. 53; P. U. R. 1917A-577.

Natural gas leaseholds should be included in a rate valuation of the system, although their value may be vague and uncertain. Re Clarksburg Light & Heat Co., Bul. No. 18; 1917 An. Rep. 53. P. U. R. 1917A-577.

Re N. E. Oil & Gas Co. (Ohio) P. U. R. 1916D-693; Wilson v. Youst, 43 W. Va. 826. The value of all the property properly used in the public service by a natural gas company was included in the valuation for the purpose of allowing a return thereon, although a part was leased from the parent company where there was no evidence upon which the value of the operating company's property could be determined. Re Pittsburg & W. Va. Gas Co., Bul. No. 24; 1917 An. Rep. 179; Campbell v. Hood River Gas & E. Co., P. U. R. 1915D-877.

It is not unreasonable to allow a small value on a limited amount of undeveloped or reserve leasehold territory, honestly and prudently acquired, for the not too far distant needs of applicant's consumers. Re The W. Va. Tract & Elec. Co., Bul. No. 34.

In order to insure a sufficient reserve territory to meet future demands of applicant, 25,000 acres should be assigned for that purpose, at a valuation of $15.00 per acre and 50 acres assigned to each of its 129 producing wells. Re Huntington Development and Gas Co., Bul. No. 38. An allowance of $50.00 per acre was made as a fair value for the leaseholds of petitioners. Re The W. Va. Central Gas Co., Bul. No. 40.

Where a gas utility has an established business, consisting of many miles of transmission lines and a number of large distributing plants, and has been purchasing from other producers more than one-fourth of the gas produced and sold by it at a cost somewhat less than the cost of its own production, the mere fact that it does not own all the producing gas acreage in proximity to its fields and lines does not necessarily mean that it will be deprived of the gas production therefrom, but judging from past experience and its strategic situation, it is more than probable that such utility company should be able to procure gas produced from adjacent territory by independent operators at a reasonable price. Re United Fuel Gas Co., Bul. No. 43.

A gas utility should only carry at the expense of its consumers, such undeveloped land as will insure uninterrupted service, and an adequate supply of gas under a reasonable forecast of future conditions. Re United Fuel Gas Co., Bul. No. 43.

taining to such public service corporation, or who shall falsely make any statement required to be made to the commission, shall be deemed guilty of a misdemeanor and, upon conviction thereof, shall be fined not more than one thousand dollars or be confined in jail not more than one year or both, in the discretion of the court. (Acts of 1915, chap. 8.)

Sec. 27. Any person or public service corporation, firm or association who shall violate any of the orders or findings of the commission shall be guilty of contempt and the commission shall have the same power to punish therefor as is now conferred on the circuit court, with the right of appeal in all cases to the supreme court. (Acts of 1915, chap. 8.)

Sec. 28. If any person, firm or corporation subject to the provision of this act shall fail or refuse to comply with any requirement of the commission hereunder, for which a penalty has not been hereinbefore prescribed, such person, firm or corporation shall be subject to a fine of not less than one hundred dollars nor more than five hundred dollars for each offense; and such person or firm and the officers of such corporation may be indicted for their failure to comply with any requirement of the commission under the provision of this act and

VALUATION-EXCESS HOLDINGS

When it is apparent that a larger reserve acreage of undeveloped leaseholds has been acquired than past experience and a reasonable forecast of future demands would justify as a capital investment, it becomes the duty of the commission to define, in a general way, the limits of reserve acreage that may be properly carried at the expense of the consumer of the present rate period. Re United Fuel Gas Co., Bul. No. 43.

Assuming that on account of exhaustion of its gas fields and increased consumption, the applicant will require 150 additional producing wells each year to meet the depletion of wells and increasing demand, and that a reasonable percentage of its undeveloped territory will prove productive, and considering the fact that applicant is earning enormous profits from its oil and gasoline business which are dependent upon the probable productiveness of the undeveloped acreage held as gas reserve without making any substantial contribution to the expense of carrying charges or return upon the investment. Fifty per cent of the 770,034 acres of undeveloped leaseholds valued at $5,329,312.26, or $2,664,756.13, is a fair value of applicant's investment in unoperated acreage chargeable to its gas business. Re United Fuel Gas Co., Bul. No. 43.

VALUATION-NATURAL GAS WELLS

The entire cost of a natural-gas producing well, including material and labor, should be treated as capital or investment, rather than as an operating expense. Clarksburg Light & Heat Co., Bul. No. 18, 1917 An. Rep. 53, P. U. R. 1917A-577.

Taking into consideration the gas and capacity of the wells of the applicant, a fair valuation per well is $5,000. Re Huntington Development and Gas Co., Bul. No. 38.

VALUE OF COMMODITY

A valuation for rate purposes of a spring owned by a water utility, based upon the saving due to its purity which rendered chemical treatment unnecessary, was held by the commission to be excessive where the supply from the spring was not adequate to the demand upon the utility and the water supplied by the utility therefore required chemical treatment. Re Charles Town Water Co., Bul. No. 9; Bien. Rep. 1915-16, p. 84; P. U. R. 1916D-725.

Natural gas has no intrinsic value inherent to its natural characteristics that should be taken into consideration in fixing the rates to be paid therefor. Re United Fuel Gas Co., Bul. No. 43. The quantity of gas consumed, and the consequent reduction of heat units in the gas in passing through the process by which the gasoline is extracted is perhaps equalized from the standpoint of the consumer as well as the operating company by the improvement in the quality of gas for domestic purposes, the saving of wastage in removing from the gas foreign substances which must otherwise be removed by "blowing. drips." Re United Fuel Gas Co., Bul. No. 43.

VALUATION-WORKING CAPITAL

Working capital is a proper item to be included in a valuation of a water utility's property for rate purposes. Re Charles Town Water Co., Bul. No. 9, Bien. Rep. 1915-16, p. 84, P. U. R. 1916D725.

A sum equal to the monthly income of a natural gas company was held a sufficient allowance for working capital, including supplies for current use. Clarksburg Light & Heat Co., Bul. No. 18; 1917 An. Rep. 53; P. U. R. 1917A-577.

Ten per cent for going value and $2,000.00 for working capital is allowed in addition to the physical value of applicant's plant. Re Light, Fuel & Power Co. & Gassaway Gas Co., Bul. No. 39. $70,000 or an average monthly collection from consumers is allowed for working capital." Re W. Va. Central Gas Co., Bul. No. 40.