plied to the city of New York, and as the pressure of gas so supplied is fixed by law at not less than one inch nor more than two and one-half inches in any service mains in said city, at any distance from the place of manufacture, said law fixes the pressure of gas at which all customers and consumers of the company must be furnished in said city. In connection with the order in the case of the Consolidated Gas Company, the Commission made the following memorandum: The Commission of Gas and Electricity has this day filed an order fixing the maximum rate at which the Consolidated Gas Company of New York shall sell its gas to its consumers for three years from May 1st, 1906, at eighty cents per thousand cubic feet, such gas to be of 22 candle power, and of the purity and pressure now established by law. Orders have also been issued in the case of the other companies operating in the borough of Manhattan against which complaints were filed, viz.: the New Amsterdam, Standard and Mutual. The rate of eighty cents per thousand cubic feet has been fixed in the case of each of said companies. Orders will be issued forthwith in the cases of the Central Union and Northern Union Companies, operating in the borough of The Bronx. An investigation is now being held in the matter of the complaints against the Brooklyn Union Gas Company. The Consolidated Company is the largest company operating in New York, and on October 31, 1905, had, issued and outstanding, $80,000,000 capital stock, and bonds and convertible debentures amounting to $21,245,000. tober 31, 1905, it sold to Consumers. Street lamp use Total . . During the nominal year ending Oc 13,037,164,550 cu. ft. 271,199,223 The Company received an income from Consumers Street lamps. Total. 13,308,363,773 $13,012,206 09 $13,572,029 20 The cost of manufacturing and distributing the gas sold to consumers amounts to $7,920.077.46, or 60.75c. per thousand cubic feet, not including fixed charges of the Company, amounting to $936,883.24. This cost per thousand cubic feet includes not only the actual repairs and replacement for the year ending Octo ber 31, 1905, but an additional sum sufficient to bring the expenditures for repairs and replacements to the average expenditure by the Company for twenty years for these items. Upon the hearing the Consolidated Gas Company produced its contracts for the purchase of oil, coal and other materials used in the manufacture of gas, and also its contracts for the sale of its residuals. On the first day of July, 1905, a law passed by the Legislature of 1905 went into effect, which compelled the Consolidated Gas Company to furnish gas of an illuminating power of 22 candles, which was an increase of two candle power over that formerly prescribed by law. The nominal year ending October 31, 1905, included four months only of operation under the higher candle power requirements. As those months were during the warmer weather when the cost of enrichment is least, the Commission found that 1.81c per thousand cubic feet should be added to the actual cost of gas as found for the nominal year to obtain the cost of manufacturing and distributing gas of 22 candle power for 12 months. The value of the property of the Consolidated Gas Company actually employed in the manufacture and distribution of gas on October 31, 1905, did not exceed the sum of $30,000,000. Evidence taken before the Committee appointed by the Senate by resolution adopted May 15, 1885, was introduced, showing the cost of the properties of the constituent companies, exclusive of franchises, as appeared on their books, to be in 1884 ... $20,942,632 88 The net additions for construction from 1884 to To this should be added value of materials on 9.693,565 90 616,470 08 $31,252,668 86 Recently property at Eighteenth street, formerly used as a coal gas manufacturing plant by the Consolidated Gas Company, was condemned by the city of New York, and while an award has not yet been made by the Commissioners appointed to condemn said property, title has passed to the city and the amount of the award, when made, will carry interest at the rate of six per cent. from the date the city took title. The value of the property so taken is not actually used by the Consolidated Gas Company in the manufacture and distribution of gas. The value of said property as testified to by the Consolidated Gas Company on the condemnation proceedings was $2,655,000. The Commission also had before it the return of the Consolidated Gas Company made to the State Board of Tax Commissioners for the purpose of taxation, which return was duly verified. The value of the property of the Company was shown by the return to the State Tax Commissioners June 30, 1905, exclusive of franchise, allowing for depreciation of the real estate, plant, mains, services and material and also meters, supplies and other personal property, was $27,408,700.91. It was contended by the company that the amount so returned to the State Board of Tax Commissioners did not represent the true value. But all of this testimony, with other pertinent evidence, was considered by the Commission in arriving at the value of the property of the Consolidated Gas Company actually used in the manufacture and distribution of gas. In allowing a fair return upon the value of the property actually employed in the gas making business, account has been taken of the nature and hazard of the businees and of the return allowed on similar investments. The Commission thinks that eight per cent. is a reasonable return upon the actual value of the property owned by the Company and used in the manufacture and distribution of gas. It will be remembered that this return is not based upon the capitalization of the company, but upon the actual capital engaged in the manufacture and distribution of gas. It was strenuously urged before the Commission on behalf of the Company that the Commission should allow the capitalization of the Company's franchise as it was assessed by the State Board of Tax Commissioners at $7,781,000, and upon this the Company paid a yearly tax, which entitled the Company as a matter of law to such capitalization. On the evidence before the Commission it is questionable whether the Consolidated Gas Company has franchises of any considerable value. The Commission believes that these franchises, granted by the people without compensation, should not be capitalized against the public, thereby compelling the public to pay a profit upon the value of the favor granted by it. The seeming injustice of requiring a corporation to pay taxes upon a franchise and at the same time refusing to allow the capitalization of that franchise is sophistical, not real. The franchise tax is paid by the corporation but charged against the public as an expense of operation and in reality is therefore paid by the consumer, not by the company. The Astoria Light, Heat and Power Company is building a plant at Astoria, Long Island, and proposes building a tunnel under the East river connecting its works with the distributing system of the Consolidated Gas Company in Manhattan. The Consolidated Gas Company is the owner of all of the capital stock of the Astoria Company. Large expenditures have already been made in the construction of its first unit, which unit will have a total capacity of 20,000,000 cubic feet per day, while the plant when completed will eventually produce an amount of gas equivalent to that now sold by the Consolidated Gas Company on the Island of Manhattan, including that purchased from other companies by it. Considerable evidence was taken in reference to the Astoria plant and the proposed removal of the Consolidated manufacturing plant thereto. The Company claims that such removal from the Island of Manhattan is made in obedience to a public demand therefor. In any event, the Commission believes that the prospective economies in the cost of manufacture and the increase in the sales of gas by reason of the reduction in price will enable the company to pay a reasonable return on any necessary investment in Astoria. This conclusion was arrived at by the Commission after a most exhaustive and painstaking hearing and investigation, covering a period of nearly three months, in the course of which the plants of the Company were examined and over 5,000 pages of testimony taken. It will be remembered that this investigation was not initiated by the Commission, as it has no authority to inquire into and fix the price of gas in the city of New York or elsewhere except upon the complaint of 100 or more customers of the company com- . plained against or upon the complaint of the mayor of a city. After such complaint was made such investigation was commenced and the Commission then had but one duty to perform and that was to proceed with the same as carefully and as expeditiously as possible. The Commission believes that the natural increase in gas sales will be greatly stimulated by the reduction in price and is satisfied that the price fixed is fair to the consumer, the public and the company. The combined authorized capital stock of the seven companies operating in the boroughs of Manhattan, The Bronx and Brooklyn, against which complaints were made, aggregated the sum of $161,500,000, of which $133,946,400 has been issued. The outstanding bonded indebtedness of the same companies amounted to $61,914,600. The annual sale of gas by the same companies to consumers was 26,626,628,183 cubic feet and to the city of New York, 763,958,259. In the Matter of the Complaint of the Mayor of the City of Auburn, as to the illuminating power, purity, pressure and price of gas furnished by the Auburn Gas Company. The Mayor of the city of Auburn made formal complaint to the Commission December 30, 1905, as to the illuminating power, purity, pressure and price of gas furnished by the Auburn Gas Company. The complaint alleged that since 1902 another company, known as the Citizens Light and Power Company, had also supplied gas in the business portion of the city, which was generally termed the competitive district, where the price of 50 cents net per thousand feet had been reached. The price charged by the Auburn Gas Company in the non-competitive district had been $1.35 net. In the fall of 1905 the Citizens Light and Power Company sold its gas plant and franchise, retaining its electric plant, to the Auburn Gas Company. The mains of the two companies were connected and a uniform price of $1.25 per thousand adopted, which was the price at the time of the filing of the complaint. The gas supplied by the Auburn Gas Company was manufactured by the Empire Coke Company of Geneva and delivered at Auburn by pipe line. The coal gas plant of the Auburn Gas Company was not in operation and the water gas plant of the Citizens Company at the time of the institution of the proceedings was operated a portion of the time. The original franchise of the Citizens Company provided for a price of $1.25 |