First 100,000 cubic feet of gas per meter per furnished by it, or a fair return upon its inmonth, $1.20 per M cu. ft.

Next 400,000 cubic feet of gas per meter per filed herein by Hon. B. Meredith Langstaff, month, $1.05 per M cu. ft.

10 F.(2d) 167

any and all statements contained in the said report.

"Increases in the cost of operation, particularly those due to the high prices necessarily paid for coal and coke, justify an increase rather than a decrease of the rates now charged by this company. In deference, however, to the views of the commission, reached after extended investigation, and in an expectation or hope that, as intimated by the commission in its opinion in the Case of the Consolidated Gas Company decided concurrently with this case, some reductions in operating expenses during the period fixed by the commission for the continuance of the rates now prescribed may render such rates more nearly adequate, the New York & Richmond Gas Company has determined to, and does hereby, accept the said order of August 30, 1922, upon the

terms and conditions herein set forth."

39. On or about the 20th day of May, 1921, contemporaneously and in conjunction with its said proceedings as to rates in case No. 79, the said commission duly instituted a proceeding before it, upon its own motion, in its case No. 108, relative to the standards of purity, lighting power, and heating power of gas and the standards of measurement thereof, in the city of New York and suburban territory. Such proceedings were had in the said last-mentioned proceeding that on or about the 30th day of August, 1922, contemporaneously with its said rate order in case No. 79-S, the said commission made and entered an order in its case No. 108, wherein and whereby the commission found and determined that the standard of 22 candle power theretofore prescribed by statute was unreasonable, uneconomical, and improper; that the continuance of such standard would not be in the public interest, and that a standard of quality and measurement based upon the heating power of gas, as thereinafter more particularly specified, should be fixed by the commission, and wherein and whereby the said commission directed that on and after October 21, 1922, each gas corporation supplying manufactured gas in the boroughs of Manhattan, Brooklyn, the Bronx, Queens, and Richmond, comprising the city of New York, and in the franchise territory of the Queens Borough Gas & Electric Company, in the county of Nassau, should, in lieu of the existing standard or standards, furnish to its consumers a quality of gas which should comply with certain requirements therein prescribed including a requirement that, under specified conditions, the gas furnished should have a total heating value on a monthly average of not less

than 537 British thermal units per cubic foot, and a daily average of not less than 525 British thermal units per cubic foot on any three consecutive calendar days in any month, all as more fully set forth in the said order, and wherein and whereby it was further directed that the said order should take effect on the date specified therein, and should continue in effect until changed, modified or abrogated by the said commission, and that, within ten days of the service of a copy thereof, each gas corporation therein described, including the plaintiff, should notify the said commission whether the said order was accepted and would be obeyed.

40. Thereafter, the said commission caused a certified copy of the said order in its case No. 108, of August 30, 1922, to be duly served upon the plaintiff; and on or about the 15th day of September, 1922, the plaintiff duly notified the said commission in writing that the terms and conditions of the said order in case No. 108 were accepted and would be obeyed by the plaintiff. The plaintiff's acceptance of the said order of the commission in case No. 79-S was based and conditioned on the contemporaneous entry of the order in case No. 108 and the continuance of the calorific standard thereby fixed.

41. Thereafter, and in pursuance of the said orders of the commission in cases Nos. 79-S and 108, the plaintiff duly filed with the said Commission, and duly posted and published as required by law and order of the said commission, its tariff schedules, setting forth the rates, charges, and classifications to be in force for the service to be furnished by the plaintiff, in accordance with

the said orders of the said commission in its case No. 79-S and case No. 108, of August 30, 1922, and the plaintiff has complied in all respects with the terms, provisions, and conditions of the said order in case No. 79-S and of the said order in case No. 108.

42. The rates charged by the plaintiff to its general consumers, from January 1, 1922, to October 31, 1922, were $1.25 per 1,000 cubic feet of gas furnished, with a service charge of 75 cents per meter per month, or 22 cents per day; from November 1, 1923, to June 8, 1923, the rates prescribed by the said order of the commission of August 30, 1922; and since June 8, 1923, the plaintiff has charged, in pursuance of the preliminary injunction herein granted, an equivalent flat rate of $1.45 per 1,000 cubic feet of gas, with certain gradations for quantity consumption. The rate charged by the plaintiff to the city of New York was 75 cents per 1,000 cubic feet, in accordance with

45. By chapter 898 of the Laws of 1923 of the year.

10 F.(2d) 167

50. The reasonable and necessary average cost of oil used by the plaintiff during the year 1922 was 7.19 cents per gallon, during the year 1923 was 5.31 cents per gallon, and during the year ended November 30, 1924, was 4.18 cents per gallon.

51. The plaintiff necessarily and reasonably used in its generators, in the manufacture of gas during the year 1922, 36.239 pounds of anthracite broken coal and coke per 1,000 cubic feet of gas made. During the year 1923 the plaintiff reasonably used 36.541 pounds of anthracite broken coal and coke per 1,000 cubic feet of gas made. The necessary amount of such generator fuel used during the year ended November 30, 1924, was 35.98 pounds per 1,000 cubic feet of gas made.

52. The average cost to the plaintiff of anthracite generator coal used by it during the year 1922 was $11.3122 per gross ton delivered at the plaintiff's plant. Such cost during the year 1923 was $11.6724 per gross ton, and during the year ended November 30, 1924, was $11.515 per gross ton. The average cost to the plaintiff of coke used by it during the year 1922 was $16.0995 per gross ton delivered at the plaintiff's plant and such cost during the year 1923 was $10.5402 per gross ton, and during the year ended November 30, 1924, was $9.4703 per gross ton.

53. The plaintiff also necessarily and reasonably used under the boilers, in the manufacture of gas during the year 1922, 18.115 pounds of fuel consisting of bituminous and anthracite steam coal, screenings from the anthracite generator coal, and coke breeze. During the year 1923 such boiler fuel necessarily and reasonably used by the plaintiff amounted to 18.144 pounds per 1,000 cubic feet of gas made, and during the year ended November 30, 1924, to 13.49 pounds per 1,000 cubic feet of gas made together with the electric energy purchased to run the blowing equipment.

54. In the manufacture of water gas there is also required the use of iron mass, city water, and incidental minor materials and supplies. The cost of these items in the plaintiff's plant amounted in 1922 to 1.527 cents per 1,000 cubic feet of gas made, in the year 1923 to 1.85 cents per 1,000 cubic feet of gas made, and in the year ended November 30, 1924, to 1.349 cents per 1,000 cubic feet of gas made.

55. In the manufacture of water gas under the conditions obtaining in a plant such as that of the plaintiff, there is realized as a residual credit under average operations, water gas tar equal in amount to from about 10

to 11 per cent. of the gas oil used. During the year 1922 there was realized 201,078 gallons of water gas tar for which production expense was credited at the rate of 3.62 cents per gallon. During the year 1923 there was realized 227,808 gallons of water gas tar for which production expense was credited at the rate of 3.81 cents per gallon, and during the year ended November 30, 1924, there was realized 255,866 gallons of water gas tar for which production expense was credited at the rate of 5.07 cents per gallon.

56. There is also realized from the manufacture and distribution of gas, in the plaintiff's works and system, a residual credit for drip oil reasonably amounting to approximately 1.3 per cent. of the gas oil used. Such drip oil, during the years 1922, 1923, and 1924, as sold by the plaintiff, was credited to the cost of production.

57. In the manufacture of water gas of the calorific content of not less than 650 British thermal units per cubic foot, as prescribed by chapter 899 of the Laws of 1923, under the conditions obtaining in a plant such as that of the plaintiff, there would be required for generator fuel, per 1,000 cubic feet of gas made, approximately 35.5 pounds of the grade being supplied in recent years, or its fuel equivalent, and for boiler fuel per 1,000 cubic feet of gas made, approximately 17.6 pounds of solid fuel, or its fuel equivalent in water gas tar, and there would be realized, as residual credit under average operations, water gas tar amounting to .752 gallons per 1,000 cubic feet of gas made.

58. There is also necessary in the manufacture of water gas, in a plant such as that of the plaintiff, the employment of gas-making labor and repair labor, the use of repair material, and the incurring of miscellaneous works expense and gas storage. During the year 1922, under the prices and rates of pay then in force the cost of gas-making labor in the plaintiff's plant was 8.149 cents, of repair labor and material 4.804 cents, and of miscellaneous works expense and gas storage 1.333 cents, per 1,000 cubic feet of gas made. During the year 1923, under the prices and rates of pay then in force, the cost of gasmaking labor was 8.548 cents, of repair labor and material 4.256 cents, and of miscellaneous works expense and gas storage 1.275 cents, per 1,000 cubic feet of gas made. During the year ended November 30, 1924, the cost of such items was, for gas-making labor 7.5812 cents, for repair labor and material 4.9886 cents, and for miscellaneous works expense and gas storage 1.3617 cents, per 1,000 cubic feet of gas made.

59. During the year 1922 under the prices of material and labor at that time in force, the reasonable and actual cost of the water gas manufactured in the plaintiff's plant for the use of its consumers was 61.257 cents per 1,000 cubic feet of gas made. During the year 1923 such cost was 54.261 cents per 1,000 cubic feet of gas made, and during the year ended November 30, 1924, was 46.7438 cents per 1,000 cubic feet of gas made.

60. In the manufacture and sale of gas, a percentage of the gas made is necessarily and unavoidably lost, due to condensation, difference in temperature at the consumers' meters, slow meters, stolen gas, leakage, and the like. The relative amount of gas lost varies according to the sales of gas in relation to the mileage and size of mains, the character of the soil in which the mains are laid, and various other factors. I find that the unaccounted-for gas, as to the plaintiff, represented in 1922 approximately 9.91 per cent., in 1923 approximately 10.42 per cent., and in the year ended November 30, 1924, approximately 11.09 per cent., and that in calculating the plaintiff's present requirements and costs these approximate figures should be used as a basis of computation.

61. During the year 1922 the plaintiff sold to its consumers 632,599,200 cubic feet of gas, and during the year 1923, 694,527,200 cubic feet of gas. During the year ended November 30, 1924, such gas sales amounted to 712,671,000 cubic feet. The consumption of gas and its sale varies from time to time, depending, in large part, upon the weather and consequent factors. The "peak" or maximum demand in the territory served by the plaintiff is found in the winter months. The plaintiff company must therefore be prepared not alone to make sufficient gas to meet a total annual demand, but must be prepared to meet such maximum day's demand as may develop, and the maximum day in any year may exceed the maximum day of any previous year. The increased use of gas as a substitute for coal for heating and other domestic uses has a tendency to accentuate the maximum day's demand in relation to the annual output, and thus requires a relatively large plant capacity in relation to the average daily requirements. I find that the plaintiff's plant ought reasonably to have, in addition to a reasonable reserve manufacturing capacity of the plant as a whole, a reserve generating capacity equal to the capacity of its largest generating unit (3,500,000 cubic feet per day) as accidents or the need for repairs may at any time take this unit

out of use, and the plant must therefore have sufficient capacity to meet a possibly increased maximum day's demand, if it occurred at a time when this largest generating unit was not being operated.

62. The actual and reasonable cost of manufacture of gas supplied by the plaintiff to its consumers during the year 1923 was 68.212 cents per 1,000 cubic feet of gas sold. Such cost during the year 1923 was 60.8 cents per 1,000 cubic feet of gas sold, and during the year ended November 30, 1924, was 52.8307 cents per 1,000 cubic feet of gas sold.

63. I find that the reasonable and necessary amount of taxes actually paid or accrued by the plaintiff on the property owned and used by it for the production and distribution of gas and upon its gas operations was, during the year 1922, 7.882 cents per 1,000 cubic feet of gas sold; during the year 1923, 8.994 cents per 1,000 cubic feet of gas sold, and during the year ended November 30, 1924, 10.4014 cents per 1,000 cubic feet of gas sold. The foregoing figures of taxes actually and reasonably paid by the plaintiff include the amount actually paid or accrued by the plaintiff for federal income taxes upon its gas operations, under the rates actually charged by it, of 1.323 cents per 1,000 cubic feet of gas sold during 1922, of 2.741 cents per 1,000 cubic feet of gas sold during 1923, and of 4.199 cents per 1,000 cubic feet of gas sold during the year ended November 30, 1924.

If, however, the $1 rate prescribed by chapter 899 of the Laws of 1923 had been in force during the full period of the proofs herein, the plaintiff would have paid no federal income tax upon 1922 operations, and would not pay any federal income tax upon 1923 or 1924.operations, for the reason that, as hereinafter found, no net income would have been earned under such $1 rate during 1922 and 1923, and the deductions from the income during 1924 would have left no income subject to that tax. With the amount of federal income tax eliminated from the plaintiff's operations, the amount of other taxes actually paid by the plaintiff would be reduced to 6.559 cents per 1,000 cubic feet sold in 1922, to 6.253 cents per 1,000 cubie feet sold in 1923, and to 6.2024 cents per 1,000 cubic feet sold in the nominal year ending November 30, 1924.

64. There should be included in the total cost of making and distributing gas the cost of renewals and replacements of property owned by the plaintiff, and from the evidence before me in this case I find the sum