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this 10% be not added to the values of the plants, including
all items under headings "Land," "Buildings," and "Station Equip-
ment," but it recommends that it be added to all items included un-
der "Distribution," "Tools and Testing Equipment," "Office and
Engineering Equipment" and "Utility Equipment" on the detailed
summary sheets submitted herewith."

We have determined that the overhead charges shall be 12%.

This item includes : General engineering and engineering ex-
penses, office salaries, supplies and expenses, printing and station-
ary* legal expenses of organization, other legal expenses, injuries
and damages, insurance, interest and taxes, brokerage and com-
missions, expenses of securing capital, supervision, omissions and
contingencies.

The depreciation of the physical property was based upon the
following life tables :

Years

Buildings 33 1/3

Boiler Water Tube (as operated) 30

Steam turbine (as operated) . — 25

Motor Generators Switchboards 20

Electric Meters - •. IS to 25

Gras Meters ^ 20

Gas Mains (2" and 3") 25

Gas Mains (4" and above) 30

Gas Services 15

Gas Generators 20 to 33 1/3

Checker Brick - ^ 5



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18 ARIZONA CORPORATION COMMISSION

Years

Station Meter Gas „..2S

Pumps - „ 20 to 25

Cedar Poles 20

Cross Arms, pins, etc. . — 20

W. P. Cu. Wire - 20

Transformers - - 20

Gas Holder ^ ^ 50

Lamp Block Separator •. 10

Arc Lamps 15

Electric Sub-station Equipment - * 20

A calculation shows that upon the application of these life
tables to the quantities of equipment in the possession of the com-
pany, the depreciation percentage, amounts to 4 per cent per annum
of the reproduction value new of the physical property.

IT IS THEREFORE ORDERED that the total value of the
company on Sept. 30th, 1914, is as follows :

Present Value

Physical Value Elec. Aug. 1, 1912 $333,587.00

Physical Value Gas, Aug. 1, 1912 242,258.00

Total (a & b) $575,845.00

Working Capital (c) $ 50,000.00

Depreciation Reserve Fund (d) ^ 64,292.00

Going Value (e) ~ 68,542.00

Amounts expended for construction Aug. 1, 1912

to Sept. 30, 1914 (f) 145,382.00

U. S. Contract Value Aug. 1, 1912 (g) 75,718.00

Total Value Sept. 30, 1914 $979,779.00

IT IS ALSO ORDERED that the Company should be allow-
ed to amortize the following charges :
Discount on Bonds issued previous to Aug. 1, 1912....$63,460.00

Discount on Bonds issued since Aug. 1, 1912 18,900.00 (h) $82,360.00

Expense of Commission hearing to Sept. 30, 1914 (i) 34,778.00

Providing however, that of these amounts the following have

been amortized previous to Sept. 30th, 1914:

Bond Discount amortized and placed in fund available for corpor-
ate use ~ $2,389.00

U. S. Contract Value amortized and placed in fund available for

corporate use in construction ^ 1,833.00

Expense of Commission hearings amortized and treasury re*

imbursed 7,101.00



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ARIZONA CORPORATION COMMISSION 19

All of these amortizations are to be carried out in the manner
set forth in said agreement hereinbefore referred to.

IT IS FURTHER ORDERED that the rates now in effect
which are on file with this Commission, and such further rates as
the Commission may from time to time approve or make shall be
the authorized rates of the Company.

IT IS FURTHER ORDERED, that as the company acquires
more property and extends and improves its property, the consent
of the Commission having first been obtained, it shall add such ex-
penditures properly chargeable to capital accounts, made after Sept.
30th, 1914 to the value above stated as of Sept. 30th, 1914, at the
end of each calendar year and shall report the same to the Commis-
sion for inspection and approval.

IT IS FURTHER ORDERED, that, whenever so desired by
the Commission, the company shall show by reports satisfactory to
the Commission and subject to the inspection of the Commission,
the accounts of the company have been kept in accordance with the
Uniform Classification of Accounts for Electric Corporations adop-
ted by the Commission the 21st day of October, 1913.

IT IS FURTHER ORDERED that if at any one of the annual
periods, it is found that the "Rate of Return" exceeds 10%
of the then current value, the company with the approval of the
Commission must reduce its rates forthwith to such an extent that
the estimated "Rate of Return" for the following year will be less
than said 10% but not lower than 8%.

In making any reduction the Company shall be directed by
the Commission.

ARIZONA CORPORATION COMMISSION



Chairman.
(SEAL) A. W. COLE,

W. P. GEARY,

Commissioners.
Dated at Phoenix, Arizona, this 26th day of June, 1915.
Attest:

F. L. BANTA

Acting Secretary.



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20 ARIZONA CORPORATION COMMISSION

BEFORE THE ARIZONA CORPORATION COMMISSION



In re Mountain States Telephone^

& Telegraph Company Exchange ^ DOCKET No. 8.

at Miami. J

This is an application involving the closing of the Mountain
States Telephone & Telegraph Company exchange at Miami, Ariz-
ona. The reasons advanced therefor are to the end that other
telephone companies handle local business. The exchange of the
Mountain States is located at what is termed the Old Townsite of
Miami and inasmuch as patrons therein are proposed to be served
by direct trunk line from the Globe Exchange, it is evident that
the change will result in a vast betterment of service at reduced
cost.

IT IS ORDERED : That Mountain States Telephone & Tele-
graph Company be, and the same is hereby permitted to discon-
tinue its Telephone Exchange in the Old Townsite of Miami.

ARIZONA CORPORATION COMMISSION
W. P. GEARY,

Chairman.
(SEAL) A. W. COLE,



Commissioners.
Dated at Phoenix, Arizona, this 18th day of November, 1914.
Attest :

FRANK DE SOUZA,
Secretary.



BEFORE THE ARIZONA CORPORATION COMMISSION



DOCKET No. 8.



In the Matter of the Application of'^
Mountain States Telephone &
Telegraph Company for permis-
sion to sell line of telephone be-
tween Camp Verde and Thomp-
son's Ranch, Arizona.

This cause came on regularly for hearing the 15th day of May,



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ARIZONA CORPORATION COMMISSION 21

1914, and involves the disposal by the Mountain States Telephone
tSc Telegraph Company of an old iron grounded circuit between
Camp Verde and Thompson's Ranch, Arizona, to the present pa-
trons thereof.

The proposed purchasers have already filed a similar request
with this Commission. This is a matter of little importance except
to the parties directly concerned, and we will enter an order herein^
approving such disposal and sale.

IT IS ORDERED : That Mountain States Telephone & Tele-
graph Company be and the same is hereby authorized to sell and
dispose of its grounded iron circuit line between Camp Verde and
Thompson's Ranch, Arizona, in accordance with the record herein.

ARIZONA CORPORATION COMMISSION

W. P. GEARY,

Chairman.
(SEAL) A. W. COLE,



Commissioners.
Dated at Phoenix, Arizona, this 18th day of November, 1914.
Attest :

FRANK DE SOUZA,
Secretary.



BEFORE THE ARIZONA CORPORATION COMMISSION



In the matter of the Petition of M/
H. Kane and other Stockholders
for Investigation of the Affairs of
Southwestern Underwriters Com-
pany.



DOCKET NO. 12.



There was filed with this Commission, on August 1, 1912, pe-
tition or request, addressed to Chairman Geary, signed by M. H.
Kane, York, Arizona, and four other stockholders of Clifton, Ariz-



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22 ARIZONA CORPORATION COMMISSION

ona, and Phoenix, Arizona, requesting an investigation of the af-
fairs of this company for the reasons, as stated by petitioners :

1. That they were sold stock at twelve dollars and fifty cents
per share, under the representation that it would pay an annual
dividend of twenty to twenty-five per cent.

2. It is alleged that three dividends were paid out of the $2.50 ;
**that we were overcharged above the face value of the stock at
the time of sale and that there has never been any earnings from
which to pay a dividend." It is further alleged in the petition that
petitioners are informed that the funds of the Company have been
diverted from its treasury into other channels than those connect-
ed with the Company.

From such investigation as the Commission has been able to
make it appears that the Southwestern Underwriters Company had
a contract or arrangement with the Occidental Life Insurance Com-
pany of Albuquerque, New Mexico, the details of which we are not
fully informed. It is understood, however, that the Underwriters
Company handled the writing of insurance for the Occidental Life
Insurance Company.

The Southwestern Underwriters Company is not an Insurance
Company. It has never been granted a permit to sell stock, and,
so far as the records disclose, has sold no stock in the State since
the passage of the Investment Company law, hence, it can not be
classed as an Investment Company.

It follows that this Commission has no jurisdiction whatsoever
over the affairs of the Southwestern Underwriters Company. The
petition should not have been entered up in the Commission's re-
cords as a formal complaint. The petition will be dismissed.

We are informally advised by former officers of the Southwest-
em Underwriters Company that the Company filed a petition in
voluntary bankruptcy nearly two years ago, but that a hearing has
never been had on same. The Company is not in business of any
kind, so far as the Commission can determine, and, from the best
mformation obtainable, there is scarcely any possibility of it re-
suming business.

IT IS ORDERED: that the petition in the above entitled



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ARIZONA CORPORATION COMMISSION 23

proceedings be, and the same is hereby, dismissed for want of juris-
diction.

ARIZONA CORPORATION COMMISSION

F. A. JONES,

Chairman.
(SEAL) A. W. COLE,



Commissioners.
Dated at Phoenix, Arizona, this 22nd day of May, 1915.
Attest:

F. L. BANTA,

Acting Secretary.



BEFORE THE ARIZONA CORPORATION COMMISSION



In the Matter of the Application of"
BISBEE-NACO WATER COM-

PANY for Authority to install cer- [^ DOCKET NO. 16.
tain improvements and issue notes
therefor. J

ORDER

Good and sufficient reasons having been shown therefor,
IT IS HEREBY ORDERED: That the original order here-
in, dated July 1, 1914, be and the same is hereby amended so that
the notes issued in accordance therewith shall bear interest at the
rate of 7% per annum instead of 6% as provided in said Original
Order.

ARIZONA CORPORATION COMMISSION
W. P. GEARY,

Chairman.
(SEAL) A. W. COLE,



Commissioners.
Dated at Phoenix, Arizona, this 19th day of November, 1914.
Attest:

FRANK DE SOUZA,
Secretary.



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24 ARIZONA CORPORATION COMMISSION

BEFORE THE ARIZONA CORPORATION COMMISSION



In jth^ Matter of the Application of "^
BISBEE-NACO WATER COM-
PANY for Authority to Install
Certain Improvements and Issue
notes therefor.



y DOCKET NO. 16.



ORDER

This is an application of Bisbee-Naco Water Company for
authority to purchase and install in its Naco plant, in lieu of pre*
sent steam units, the following equipment:

One Die'feel type oil engine of about 225 H. P. with compres-
sor;

One ISO K. W. D. C. Generator to be direct connected to above
engine ;

One 30 H. P. Motor for driving engine compressor :

One switchboard panel for Generator, all meters and acces-
sories complete;

One starting panel for 30 H. P. Motor with circuit breaker;

Foundations, transmission machinery and accessories complete.

The total estimated cost of this equipment installed and ready
to operate, ihclading rearranging present equipment and building
to accommodate same, is alleged to be $30,000.

The- equipment now installed at the Pumping Plant of the Ap-
plicant consists of steam-boilers, triple expansion high duty steam
pumps,' Prescott duplex steam sinking pumps, Diesel type oil en-
gines, Quintuplex high duty surface pumps and triplex deep well
pumps; the Diesel engines being direct connected to the generators
and the Quintuplex and Triplex pumps motor driven. The Pres-
cott steain sinking pumps are rarely operated but are held in readi-
ness for operation. The steam sinking pumps are not prime oper-
ating units since they are not used normally when other steam units
are in service.

From the above, it is apparent that the equipment may be di-
vided into two general classes, namely. Steam Operating Equip-
ment and Diesel Oil Engine Equipment.



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ARIZONA CORPORATION COMMISSION 25

The duty required of the plant consists of pumping water from
wells to surface reservoirs and pumping from surface reservoirs to
the several storage tanks located in and around the cities of Bisbee,
Warren, Lowell, Naco,. Arizona, and Naco, Sonora. ;*

Since the operating equipment may be divided into two getieral
classes and the functions to be performed remain the same, an an-
alysis of operating costs resolves itself into the following.

1. A determination of the amount of work performed by each
of these classes of machinery;

2. Ascertaining the unit cost of such work ;

3. A comparison of the efficiency of these classes as installed
at this plant;

4. Recommendations relative to improving efficiency and re-
ducing operating costs, i'

In such analysis it is necessary to tabulate and arrange the rec-
ords of past operations, using the best data available, and fin all
cases the greatest period of time applicable and presented in evi-
dence herein will be used.

"WORK DONE BY EACH CLASS OF EQUrPMENT*'

The data available for this consideration is that shown in the
reports from April 1st to November 1st, 1913, tabulated below.

Tabulation of Hours Operating for Steam and Diesel Classes
from Apr. 1st to Nov. 1st, 1913.







OPERATING








Total


Steam






Per.


Month


Hours


Hours


Per Cent


Diesel Hours


iGent


April


720


121


16.8


599


83.2


May


744


26


3.5


718


96.5


June


720


105


14.5


615


fe5.5


July


744


189


25.5


555


•74.5


Aug.


744


16


2.4


728


97.6


Sept.


720


20


2.8


700


. 97.2


Oct


744


10


1.4


734


98.2


Nov.


720


95


13.0


625


87.0


Totals


5856


582




5274




Average


732


72.8


10.00


659.2


90.0



From this, we observe that the Steam units were in operation
ten and the Diesel units ninety percent of the total time.



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26 ARIZONA CORPORATION COMMISSION

It has been represented that the above time period does not cover
the nK>nths for general repairs of the Diesel units for this year, this
being done twice a year and being for a longer period than any
shown in the tabulation. Considering the time covered in the tabu-
lation as compared with the total life of the Diesel units, the tabu-
lation covering but a small part of the life of the Diesel equipment
we feel that the percentages as here given are above the normal for
the life of these machines, and for this item we will use 14%
for time of Steam units operating and 86% for time of Diesel
operation, or 314 days Diesel operation and 51 days steam opera-
tion per year.

'UNIT COST OF WORK DONE BY EACH CLASS OF EQUIP-
MENT."

The large items entering into a consideration of the unit costs
of operating these classes of equipment are :

Fuel Operating,

Labor Operating,

Labor Maintenance,

Material Maintenance.

From the reports made at this plant, and under the system of
accounting in vogue prior to the Uniform Classification of Ac-
counts for Water Companies issued by this Commission, it has not
been possible to secure much data regarding the cost of any of
these items excepting fuel cost.

However, from a study of these reports and the conditions at
the Naco plant relative to labor required and material used when
operating either class, it' appears that the labor operating cost is
not materially altered by a change from one class to the other, nor
is there a material increase or decrease in the two last items when
changing from one class of operating units to the other.

For these reasons, only fuel costs will be considered for unit
costs of operation, it being found that a very large part of the dif-
ference in the cost of operating these two classes of machinery is
in the fuel item.

To arrive at such unit cost of operation, it will be necessary to
tabulate the total oil consumption, showing the amount and per-



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ARIZONA CORPORATION COMMISSION 27

centages used by each class per year. This table follows and covers
a period of 4-5/12 years.

Tabulation of Oil Used for Steam and Diesel Operation from
July Ist, 1909, to Dec. 1st, 1913.

Total

Gals. Boilers Per Diesel Per



Year Used


Gals.


Cent


Gals.


Cent


Remarks


1909 50,767


16,729


33.0


34,038


67.0


Last y2 yr.


1910 114,846


48,227


42.0


66,619


58.0




1911 139,167


87,846


61.4


53,321


38.6




1912 414,270


358,944


86.6


55,326


13.4




1913 290,224


229,118


79.0


61,606


21.0


1st 11 mos.


Totals 1,009,774


738,864




270,910






Averages












4 5/12 years.












227,083


167,158


73.8


61,292


26.2





From this we find the percentages of fuel oil used by these two
classes of equipment for 4-5/12 years to be:

For Steam 73.8 per cent.

For Diesel 26.2 per cent.

Considering the condition of the oil market at this time and
the ascending cost of this commodity during the last five years, we
ceem we can conservatively assume present prices for oil when
considering present or future operations and in accordance there-
with the present price of four cents will be used. In such instance,
the total cost of fuel per year for the two classes, from the above
average, will be:

167,158 Gals., @ 4c per Gal. for Steam

Operation, 1 yr $6,686.32

61,292 Gals., @ 4c per Gal. for Diesel

Operation, 1 yr 2,451.68

For the cost per unit of work done, we must refer to the table
covering the percentage of work performed by each class, which
gives :
Steam, 14% of time, or duty — duty being constant ;
Diesel, 86% of time, or duty — duty being constant.

Thus $6,686.32 is cost of 14% and 1% of power made by Steam
units is $477.60: — $2,451.68 is cost of 86% and 1% of power made



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28 ARIZONA CORPORATION COMMISSION

by Diesel units is $28.51. This gives a ratio of fuel efficiency of
Diesel to Steam units of 1 to 16.75.

This is much above normal for these two classes and is caused
by the heavy repairs to wells in 1912 and construction during the
early part of 1913. For this reason, we will consider the most favor-
able year regarding fuel consumption thus :

48,227 Gals., @ 4c per Gal. for Steam

Operation, 1910 $1,929.08

66,619 Gals., @ 4c per Gal. for Diesel

Operation, 1910 $2,664.76

And using the same percentages of time operated or duty perform-
ed, or 14% for Steam power made, and 86% for Diesel power made,
we secure : —

$1,929.08 is cost of 14% and 1% of power made by Steam units
is $137.74;

$2,664.76 is cost of 86% and 1% of power made by Diesel units
is $30.98, thus giving a ratio of fuel efficiency of Diesel to Steam
units of 1 to 4.45.

Averaging this ratio for the best year with that obtained for
4-5/12 years, we get the ratio of fuel efficiency of Diesel to Steam
units at this plant of 1 to 10.6 which is above the ratio obtained in
other plants operating modern Steam and Diesel units. Consider-
ing the fact that some of the steam equipment is inefficient and not
to be compared with present manufacture, and considering careful-
ly the testimony and evidence presented by the Applicant herein,
we believe that a safe ratio of efficiency for Steam and Diesel units
of this plant under careful operation to be as 1 to 8. According-
ly, this calculation will be used.

"COMPARATIVE ANNUAL COST OF OPERATING THE

14% OR THE 51 DAYS PER YEAR WITH STEAM

AND DIESEL UNITS"

From an investigation of the amount of oil used per day under
boilers during 1913, it is found that the average daily consumption
of oil per boiler has been 750 gallons. It is also ascertained that
during the operation of boilers for the period, one and one-half boil-
ers 'itive been used for the total time of boiler operation. Thi?t
fives a daily oil consumption for boilers of 1125 gallons, which for
14% of one year, or 51 days, gives 67,375 gallons costing, at 4c per



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ARIZONA CORPORATION COMMISSION 29

gallon, the sum of $2,695.00. To this, we must add the cost of pack-
ing the surface steam pumps, the same often being above normal i>n
account of hardening during non-use, and this cost per year is $252.
From the total of above items, we must deduct the cost of fuel
oil for 51 days for Diesel operation, which from data for the year
1913 will be one-eighth of Steam or $336.80. Or recapitulating, we
find:

Cost of fuel for 51 days of Steam Operation $2,695.00

Cost of packing Steam pumps, excess of normal 252.00

Cost of fuel oil for Diesel operation, 51 days at J^th of

Steam $336.80

$2,947.00 $336.80
This demonstrates a saving in fuel operating costs per yec!.r,
If Diesel units replace Steam units 14% of time, of $2,610.20. This
saving is in fuel oil for operating only.

"EFFECT OF PRESENT HEAVY .DUTY ON THE DIESEL
UNITS INSTALLED"

One of the most important points for consideration in this re-
port is the effect of the heavy duty required of present Diesel equip-
ment. On account of the low efficiency of the Steam units as com-
pared to the Diesel units a comparatively short period of operating
the former increases the cost of operations at Naco to an extent ex-
ceeding the allowance for this particular item, and it has been found
necessary on account of such Steam Costs to operate the Diesel
equipment to its limit.

The load is not excessive but because there is but one large
Diesel engine capable of carrying the normal load such engine is
operated as near 365 days in the year as possible. It is such con-
tinuous operation without small needed repairs that is shortening
the life of this machine and will be given consideration here.

It is necessary from the present year's operation, to operate at
Naco 24 hours per day as can be observed from the report on Diesel
engines filed by the Applicant herein, and twelve hours has been
found to be the maximum time that pumps could be idle and main-
tain a sufficient supply in the service tanks.

Under present conditions, only small repairs could be made on
the Diesel engines without firing the Steam boilers.



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30 ARIZONA CORPORATION COMMISSION

This explains the heavy duty required of the engine and, in the
opinion of the engineers, this continuous operation will shorten the
life of the unit at least three years. If this be true, assuming the
normal life of this class of machinery to be 14 years and the first
cost $22,000.00, we find that the loss on this unit due to excessive
wear will be for the 14 years prorated, $1560.00 per year and for
three years shortened life, $4680.

This applied to the cost of equipment to replace the Steam
units, prorating per year using 14 years as the life of a new engine,
would be $334.30 per year and should be added to the economies
by the installation of another Diesel engine.

A resume of the facts presented, demonstrates that by the addi-
tion of another large Diesel power unit, a total saving of $2,944.50
can be effected, and the efficiency of the plant increased.

"SUGGESTED IMPROVEMENTS FOR PLANT AT NACO"

We suggest that the Company purchase and install the follow-
ing equipment replacing thereby the present Steam units.

One Diesel type oil engine of about 225 H. P. with compressor;

One 150 K. W. D. C. Generator to be direct connected to above
engine ;

One 30 H. P. Motor for driving engine compressor :

One switchboard panel for Generator, all meters and acces-
sories complete;

One starting panel for 30 H. P. Motor with circuit breaker;

Foundations, transmission machinery and accessories complete.

The total estimated cost of this equipment installed and ready
to operate, including rearranging present equipment and building
to accommodate that specified above, is $30,000.

In payment of said improvements the Applicant desires to is-
sue its notes in the sum of thirty thousand dollars.

After a review of all facts connected with the application here-
in and after full consideration of all testimony, it is the decision of



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