upr000283 191

V erty used and useful in the business. This required the Com­mission to determine the value of the property of that company, the amount of its earnings and a fair return on its property. The Court determined that the Commission had undervalued the property of Cities Service Gas Company and had failed to allow it a sufficient return. The Court said: ”We conclude, therefore, that 40 cents per thousand cubic feet for gas at the city gates is a reasonable, charge; that to compel the Cities Service Gas Company to fhrnish such gas at 30 cents per thou­sand cubic feet will result in confiscation of its property, and that to comp el the distributing com­panies to pay 40 cents per thousand cubic feet for gas at the city gates and permit them to set up only 30 cents thereof in their operating expense, in fix­ing their rates to local consumers, will result in confiscation of the properties of the distributing companies.” The Court also set aside the portion of the Commission’s order excluding certain gas leases from the rate base of Cities Service Gas Company, saying: ’’The commission held that certain gas leases claimed to be held by the Cities Service Gas Company for gas reserves were, in excess of the required re­serves, and that they were in fact being held for speculative purposes. The evidence established, and we have found that the officers and directors of the Cities Service Gas Company, who are men of broad ex­perience in the natural gas business, in the exercise of an honest and, we think, sound business judgment, determined that such leases were necessary to afford it an adequate gas reserve, and that such leases were acquired and are held by it as bona fide reserves, and not for speculation. ’’The commission was not empowered to substitute its judgment for that of the officers and directors of the Cities Service Gas Company as to the amount of' leases necessary to afford an adequate gas reserve, in the absence of a showing of abuse of discretion by aich -37-