It is the fundamental obligation of a public utility to furnish adequate service to the public, and the company is required to give this matter immediate consideration. The engineering staff is now making an investigation of certain service matters in the city of Milwaukee, which will receive the immediate attention and consideration of the Commission. In so far as service matters are covered by the issues in this proceeding, the Commission retains jurisdiction of the same.

The Commission has attempted to arrive at the most equitable and fair way of treating the so-called blue and yellow tickets cutstanding when this order shall go into effect, which is at midnight on Saturday, June 1, 1918. Difficulty also arises out of the question of redemption of the tickets purchased at the rate of six for 25 cents, or 4 cents per ticket. It is felt that much annoyance to patrons can be avoided by allowing the use of tickets already purchased for a limited period of time. We have therefore determined that the tickets outstanding at midnight to-day shall be permitted to be used until midnight of June 9,

1918.

It is only where the so-called blue or six for a quarter tickets are in bunches of six that the redemption can be made without an adjustment of fractions. As patrons having such tickets in their possession will have an opportunity to use said tickets until midnight of June 9, 1918, it is quite likely that a large part of the inconvenience of this adjustment will be avoided. It is necessary, however, to make provision for the redemption of all of said tickets outstanding. As to the six for a quarter tickets, we have come to the conclusion that substantial justice will be done to all ticket holders if redemption is made upon the following basis: Where three or less tickets are presented for redemption, they will be redeemed by the company for cash at the rate of 4 cents cach. Where four tickets are presented, they will be redeemed for 17 cents, and where five tickets are presented, redeemed for 21 cents. All of these tickets, of course, in bunches of six will be redeemed at the rate of 25 cents.

The company will be expected to make arrangements for the redemption which will meet public convenience in all parts of the city, and will so maintain redemption agencies until July 9,

1918, after which time redemptions will be made at the Public Service Building.

It does not appear necessary that the order shall cover any tickets except those that are sold at the rate of six for a quarter or twenty-five for a dollar, other forms of tickets not being affected by this order.

ORDER.

It is ordered that the sale of tickets at the rate of six for a quarter and tickets at the rate of twenty-five for a dollar shall cease at midnight June 1, 1918.

It is further ordered that any of such tickets outstanding shall be valid for transportation purposes until midnight of June 9, 1918, after which time said tickets shall not be valid for transportation purposes.

It is further ordered that the Milwaukee Electric Railway & Light Company forthwith make adequate provision for the redemption of all such tickets outstanding and unused after midnight of June 9, 1918; and that said company establish agencies throughout the city of Milwaukee for such redemption purposes which will adequately meet the convenience of the public desiring to redeem said tickets for cash. Said agencies for redemption purposes shall be maintained by said company until July 9, 1918, after which time redemption shall be made by the company at the Public Service Building.

It is further ordered that any of said unused tickets shall be redeemed by the company on the following basis: Tickets outstanding purchased at the rate of twenty-five for a dollar will be redeemed at the rate of 4 cents each. Tickets sold at the rate of six for a quarter will be redeemed as follows: Where three or less tickets are presented for redemption, they will be redeemed by the company for cash at the rate of 4 cents each. Where four tickets are presented, they will be redeemed for 17 cents, and where five tickets are presented, they will be redeemed for 21 cents. When presented in bunches of six, they will be redeemed at the rate of 25 cents for each bunch.

Dated at Madison, Wisconsin, this 1st day of June, 1918.

Railroad Commission of Wisconsin, by Carl D. Jackson, Henry R. Trumbower, and John S. Allen, Commissioners.

ILLINOIS PUBLIC UTILITIES COMMISSION.

RE CITY OF PEORIA AND RECEIVERS OF THE CENTRAL UNION TELEPHONE COMPANY.

1. In determining the fair present value of land for rate making it is necessary to consider its location and the use to which it may reasonably be applied.

Valuation

Land not used or useful

Future needs.

2. The value of land purchased as a site for a telephone exchange building to take the place of an existing exchange should not be included in the value of the company's property for rate making, in addition to the value of the existing exchange, on the theory that it is a reasonable provision for future requirements, but should be valued when actually put into service as if acquired at that time, proper allowance being made as a credit for the abandoned site.

3. An allowance for a right of way in a valuation for rate making should not be denied merely on the ground that no item of such expense was found on the books of the company, and that such expense as was incurred was paid out of the operating expenses.

4. A general overhead allowance of 15 per cent in a valuation for rate making was held sufficient to cover contractors' commissions and architects' fees.

Valuation

Exchange equipment

Substitute plan.

5. In the valuation of a telephone plant for rate making, existing exchange equipment should not be disregarded and an estimate of the cost of a new switchboard to take its place made the basis of value, on the theory that the existing equipment is obsolete because resulting from continued additions made by piecemeal construction. Apportionment

6. A portion of the investment in general equipment in the divisional and general offices of a telephone company should be charged to a local exchange in determining the reasonableness of the local rates.

7. No allowance should be made, in a rate valuation, for the cost of paving not actually cut and replaced.

8. No portion of the general supplies kept by a telephone company in a state should be apportioned to a particular exchange in a proceeding to determine the reasonableness of the local exchange rates. Valuation

9. A reasonable allowance should be made for working capital of

a telephone company in a valuation for rate making, although its bills are rendered monthly and are payable in advance.

Depreciation

Physical and functional

Computation,

10. Depreciation in all its phases should be ascertained by identical methods.

11. The value of additions and betterments made between the date of the appraisal and the date of valuation should be included in a valuation for rate making, but additions made subsequent thereto and proposed additions should be excluded.

12. The going-concern value of a utility plant, or the value that is distinct from the "junk" value or the actual value of the physical property, should be recognized as an actual property right and considered in a valuation for rate making, although, during the earlier years of operation, the cost of additions and betterments was paid from income. Return Operating costs Commission expense · Amortization. 13. The amortization of reasonable commission expenses should be allowed for in the operating expenses of a utility in a rate proceeding, where such expenditures have not been recouped through excessive past rates. Apportionment

Telephone Divisional and general office expense. 14. A portion of the divisional and general office expense of a telephone company should be apportioned to a local exchange in a proceeding to determine the reasonableness of the local rates.

Depreciation

Telephone plant — Annual allowance for.

15. An annual allowance of $55,000 to cover future and accrning depreciation, both physical and functional, of a telephone plant, the fair value of which was found to be $1,100,000, plus an amount equivalent to 5 per cent of the cost of future additions and betterments, was made in a rate proceeding, consideration having been given, in making this allowance, to the extraordinary hazards, such as tornadoes and sleet storms, to which such property is sometimes subjected.

16. A charge of 4 per cent of the gross receipts of a subsidiary telephone company for contract service rendered by a holding company, consisting of the rental of receivers, transmitters, and similar equipment, is an unfair and an unreasonably high charge for such service, and cannot be justified, in part, on the ground of service rendered by its engineering, accounting, and legal departments, in the absence of any contract defining the nature and necessity of such service.

17. A telephone company was held not entitled to a return of 13.61 per cent; but a rate of 7.36 per cent was held not unreasonably high.

[April 17, 1918.]

APPLICATION of the City of Peoria to compel the Central

Union Telephone Company, a corporation, to reduce its rates to its subscribers in the city of Peoria, and the application of the receivers, Central Union Telephone Company, for authority to establish a new schedule of rates in the city of Peoria, resulting in certain increases and changes in existing rates. Application for decrease denied. Discontinuance of rates for four-party line business telephones at Peoria ordered, and measured service rates for indivivdual line business telephones and two-party line business telephones at specified rates ordered.

Lucey, Commissioner: The Central Union Telephone Company maintains a telephone plant in the city of Peoria, Illinois, and conducts a general telephone business there maintaining a main exchange in the business section of the city hereinafter referred to as the Fulton street exchange, and a branch exchange hereinafter referred to as the Bluffs exchange. The Central Union Telephone Company is one of the subsidiary companies of the American Telephone & Telegraph Company, the latter company owning approximately 98 per cent of the entire capital stock of the Central Union Telephone Company. At the time this proceeding was instituted an action was pending in the superior court of Cook county in the state of Illinois, in a case entitled William A. Read et al. v. Central Union Telephone Company et al., which was an action instituted by the minority stockholders against the American Telephone & Telegraph Company and the Central Union Telephone Company, and certain other defendants, attacking the legality of the stock ownership of the Central Union Telephone Company by the American Telephone & Telegraph Company, and praying for an accounting of all money received by the parent company and for other relief in matters not pertinent to this case. As a result of such proceeding the superior court of Cook county, Judge William E. Dever presiding, appointed three receivers for the Central Union Telephone Company, and this case proceeded on the answers and cross petitions of the receivers of said company.

On November 6, 1914, the city of Peoria filed with this Commission its complaint against the Central Union Telephone Company and its receivers, alleging that the rate schedule maintained by the Central Union Telephone Company and its receivers, here