312 VALUATION, DEPRECIATION AND THE RATE-BASE 
tial life, or that the capital invested in it was being consumed, 
because neither is true. 
“In order to justify the deduction of ‘theoretical deprecia- 
tion,” I was asked in this case to assume that ‘a depreciation 
reserve ’ equal to the computed ‘ theoretical depreciation ’ had 
been collected from the public, and then to deduct from the 
company’s investment the amount of such assumed reserve. 
No such reserve had, in fact, been collected or accumulated by 
this company. The rate chargeable did not permit it, and there 
is no reason to believe that the Legislature, in prescribing the 
rate, ever contemplated it. As I have set forth in findings Nos. 
32 and 27 of my report, and as I have elsewhere indicated herein, 
the complainant gas company has maintained its property and 
investment intact in the past, through renewals and replace- 
ments at an average actual cost of approximately .3 cent per 
1000 cubic feet of gas sold, and no reason appears for believing 
that it cannot continue to do so on that basis. Even assuming 
that the statute permitted such a rate, to have imposed on the 
company’s consumers an additional burden nearly twice as great, 
representing a purely theoretical item of operating cost, merely 
to accumulate a useless reserve to justify a drastic deduction 
from investment in some ultimate proceeding as to rates, could 
not have been justified on any sound theory in the past, and 
cannot now be sustained as to the future. 
“In order to justify the assumption that a ‘depreciation 
reserve > was or should have been collected, defendants’ witness 
Hine testified in this case that such a reserve was necessary, ‘ so 
that when the property is retired for any cause whatsoever the 
fund can be charged with the cost of the property.” He testified, 
also, that the reserve should be in his opinion ‘ invested in the 
property,” and that when the funds were needed for renewals and 
replacements they would be provided °by issuing securities 
against construction work which had been done originally out of 
this fund, for the money laid aside for this fund, just to reimburse 
the treasury on account of these expenditures.’ This view 
seemed to me to disregard the obvious fact that, having deducted 
the amount of the reserve temporarily invested in property from 
that on which he proposed the company should be allowed to 
earn a return, he, to all intents and purposes, destroyed the 
earning power of such property, and investment; that therefore 
he could not issue any securities against such property, there 
being no earnings therefrom with which to pay interest on the 
securities: that the reserve could never thereafter be availed of