Davenport Water Co. v. Iowa State Commerce Commission

"Finally, on this aspect of the case, we find and determine that reproduction cost evidence is not probative evidence of value and is, therefore, not a factor relating to value that this Commission is required to consider in fixing just and reasonable rates."

"The deficiencies and defects of reproduction costs are inherent in such appraisals and render them, and the `fair value' method which depends on them, unworkable and unsound."

"In general, a rate fixed by an authorized rate-making body for a public utility is presumed to be valid and reasonable. Accordingly, the courts will not enjoin or interfere with the collection of rates established under legislative sanction unless they are plainly and palpably unreasonably, confiscatory, or excessive, and clearly proved to be such, or unless there was fraud or arbitrariness in fixing such rates.

"It must be shown by a preponderance of the evidence that the legislation or rate complained of is clearly invalid, and one claiming that a rate established by a rate-making body is unreasonable, confiscatory, excessive or violative of constitutional immunities has the burden of proving it to be such."

"The court may dismiss the appeal, modify or vacate the order complained of in whole or in part, or remand the matter to the commission for such further proceedings as justice may require. The court shall have jurisdiction to compel commission action unlawfully withheld or unreasonably delayed and the court shall have the power to set aside the commission action, findings and conclusions found to be:

"1. Arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law.

"2. Contrary to constitutional right, power, privilege or immunity.

"3. In excess of statutory jurisdiction, authority, or limitations, or short of statutory right.

"4. Unsupported by substantial evidence in view of the entire record as submitted."

"Any party may secure a review of any final judgment of the district court by appeal to the supreme court. Such appeal shall be taken in the manner provided by law governing appeals from the district court in other civil cases."

"The commissioner's findings of fact have the effect of a jury verdict and, where the evidence is in dispute or where reasonable minds may differ on inferences fairly to be drawn from the disclosed facts, the commissioner's findings of fact are conclusive on appeal. On the other hand, if there is no dispute in the facts and different inferences could not be fairly drawn from them, a question of law is presented and the court is not bound by the commissioner's findings and conclusions. (Authorities cited).

"Our duty, then, is to determine whether there is sufficient competent evidence to warrant the decision the commissioner made, not whether there is sufficient evidence to warrant a decision he did not make. (Authorities cited).

"The commissioner, not the court, weighs the evidence, and his findings will be broadly and liberally construed to uphold rather than defeat his decision. (Authorities cited)."

"Thus it becomes clear that we are not confronted with the usual judicial review of the independent judgment of the rate-making body in making findings of fact as required under the terms of the usual state utility commission rate statute. Iowa has no such administrative machinery and its statutes provide no review procedure."

"When we sustained the constitutionality of the Natural Gas Act in the Natural Gas Pipeline Co. case, we stated that the `authority of Congress to regulate the prices of commodities in interstate commerce is at least as great under the Fifth Amendment as is that of the states under the Fourteenth to regulate the prices of commodities in intrastate commerce.' 315 U.S. at page 582, 62 S.Ct. at page 741, 86 L.Ed. 1037. Rate-making is indeed but one species of price-fixing. Munn v. Illinois,94 U.S. 113, 134, 24 L.Ed. 77.The fixing of prices, like otherapplications of the police power, may reduce thevalue of the property which is being regulated. Butthe fact that the value is reduced does not mean thatthe regulation is invalid.(Authorities cited) It does, however, indicate that `fair value' is the end product of the process of rate-making not the starting point as the Circuit Court of Appeals held.The heart of the matter is that rates cannot be madeto depend upon `fair value' when the value of thegoing enterprise depends on earnings under whateverrates may be anticipated.

"We held in Federal Power Commission v. Natural Gas Pipeline Co., supra,that the Commission was notbound to the use of any single formula or combinationof formulae in determining rates.Its rate-making function, moreover, involves the making of `pragmatic adjustments.' Id., 315 U.S. at page 586, 62 S.Ct. at page 743, 86 L.Ed. 1037." (Emphasis supplied).

"In its primary sense, `consider' has been defined as meaning to think; to examine or to inspect; to fix the mind on with a view to a careful examination; to judge; to entertain or give heed to; to deliberate about and ponder over; to give close attention to, to think deliberately about, to think on or over with care, to meditate on, to reflect upon, to revolve, to study, to ponder, as to consider the matter well before deciding."

"In the present case the Utility introduced evidence in two categories, one of which it termed historical cost and the other present value. It defined its asserted net historical cost rate base as including `original cost of the property together with the acquisition cost (where purchased from predecessor companies) plus experienced engineering and other overhead costs excluded from original cost on the Company's books, together with the estimated cost of plant in process of construction or projected to meet existing loads and service requirements,' and its asserted present value rate base as `the cost new either actual or estimated of the property of Appellant reflecting price levels at December 31, 1949 less allowance for loss in value due to deterioration, obsolescence and other factors.' It now asserts that the respondent rejected all the testimony and exhibits relating to the present value of its property and `used the cost rate base.'

"The respondent was entitled to determine the probative force of the Utility's evidence upon both of its asserted rate bases. Assuming that in doing so it eliminated for valid reasons all the Utility's evidence relating to purported `present value' as being without sufficient weight to constitute a reasonable basis for the establishment of increased rates, that fact alone would not render its decision and order invalid, for it was left with evidence of historical cost which is admissible, and if that is sufficient or substantial, competent and relevant evidence it may be considered in connection with all the circumstances of the case, for determination of a rate base. Such was the decision under comparable conditions in Railroad Comm. of Cal. v. Pacific G. E. Co.,302 U.S. 388, 58 S.Ct. 334, 82 L.Ed. 319, 324-325 at p. 326 (1938), in which case the U.S. Supreme Court held that the utility could not successfully contend that it was not heard by the commission, that the evidence it offered was not received and considered and its competency and weight determined by the commission, or that the commission did not place its valuation upon the property and fix the rates upon that valuation."

"Our statute does not bind the Commission to the use of any particular formula in determining the reasonable value of the property of a public utility for rate-making purposes. Our statute merely provides that the rates prescribed shall be such as to yield a fair rate of return upon the reasonable value of the property used and useful in furnishing service, and that, the Commission in arriving at such rate base `shall give due consideration to all elements that are generally considered in determining the rate base for rate making purposes.' There are a number of formulas which are useful in the determination of the reasonable value of a utility's property for rate-making purposes. No public utility has a vested right to any particular method of valuation. City of Fort Smith v. Southwestern Bell Telephone Company, 1952,220 Ark. 70,247 S.W.2d 474."

"We cannot see the logic in the Commissioner's statement made in the case. It might as well be said that if the legislature intended that only the present fair value be used, it would have charged the Commission with the `duty to ascertainPage 597the present fair value of all property.' This the legislature did not do. It would appear more reasonable to assume that the legislature charged the Commission with the responsibility of ascertaining the reasonable value of all property for rate-making purposes. It was left with the discretion of the Commission as to what method of valuation would be used."

"There were no decisions prior to 1911 that would lead the Kansas legislature to believe thatpresentfair valuewas the only factor that could be considered in arriving at a rate base.

"We do not believe it was the intention of the legislature to restrict the use of but one factor, present fair value, in determining a rate base."

"A public utility has no vested right to any particular formula or method of valuation. Neither is the Commission bound to any particular formula or combination of formulae in determining the reasonable value of a company's property. The Commission should receive and consider all evidence which has a relevant bearing on reasonable value and then determine what formula it thinks should be used under the facts and circumstances in the case.If theCommission finds that a rate base founded upondepreciated reproduction cost is not applicable orcontains weaknesses and the finding is based uponsubstantial evidence, it should be free from judicialinterference.

"The district court erroneously concluded that the Commission was required by law to determine a rate base by the use of estimated reproduction cost new less depreciation or some related formulae, and erroneously concluded that the use of a rate base established by original cost less depreciation rendered the order void as a matter of law." (Emphasis supplied).

"It is now a familiar criterion that, in establishing a rate base:

"`the Board must determine the rate base at the fair value of the property of the public utility that is used and useful in the public service at the time of its employment therein, by viewing the plant as an integral and unitary whole, considering all the elements properly entering into the ascertainment of a reasonable return for supplying the public need. * * *'

"In so doing, it has been recognized that:

"`* * * there are a number of formulae useful in determination of fair value of a utility's property for use as a rate base and that theBoard is notand should not be bound by any simple formula orcombination of formulae.* * *.'"

"Thus the commission is required to receive proof of reproduction cost less depreciation as some evidence of present value in the case of utility property which, due to the unique restrictions placed upon it by law, cannot readily be valued by other usual methods, such as so-called `market', `sales', or `exchange' value.

"This is not to say that the rates must bebasedupon reproduction cost less depreciation. As the commission itself states, it is under no statutory or other obligation to confine itself to consideration of any particular one of the various alternative rate bases. All that the statute says is that the commission shall `determine the just and reasonable rates' with `due regard, among other things, to a reasonable average return upon the value of the property actually used in the public service.'`Dueregard' to one factor `among other things' requiresconsideration of that factor. It is by no meanscontrolling.While price indices rise in some periods, in others the general level of prices declines.What consideration is to be given to`value'`among other things'is for the commission todecide,having in mind that the overriding principle governing its primary duty is that it shall determine `just and reasonable rates.'" (Emphasis supplied).

"It seems thatin a state such as ours where no stateutility commission with a highly trained and skilledtechnical and economic staff is maintained toregulate urban utilities, a fair value rate base isthe only fair and just measuring tool by which thecourt can determine whether or not a rate establishedis or is not confiscatory. To adopt the appelleecity's contention of `end result' in this state wouldunder present conditions result in utter chaos.(Emphasis supplied).

"As heretofore stated, rate making being a legislative process, no record need be kept of the council's hearings and no findings of fact need be reported. What facts would there then be to review? Courts, of course, must not surrender the power of review to determine the constitutional question of confiscation, and to accept any rate fixed by the council as factually determined without a revaluation of its basis would seem to call for a surrender of the court's function. (Authorities cited).

"Here,of course,we are not favored by any factdeterminationexcept that the council decided no rate increase was required.The view that councils areclassed as statutory commissions with administrativefunctions we decline to accept.(Emphasis supplied).

"It is difficult enough, as is richly illustrated in the present case, to follow hundreds of pages of testimony of technical experts, and detailed computations of accountants and engineers, when some fairly certain guides and yardsticks are available. It would be impossible without them, which may account for some courts' apparent acts in accepting the findings of their highly trained and efficient utility commissions regardless of manner of determination or of whether or not a fair value was disclosed. Such a finding of fact under their acts may not be a denial of due process, and so unless it otherwise appears that the return is so unjust and unfair as to amount to confiscation, the court will not interfere."

"Evidence of reproduction cost new less depreciation is admissible in a hearing on a rate case, but its probative value is primarily to be determined by the Commission. It is not required to accept this opinion evidence without appraisal, but can weigh it and evaluate it.

"In the Mississippi Southern Bell Case the Commission admitted opinion evidence on reproduction cost new, but after considering it, concluded the evidence was conjectural, speculative, unrealistic and unreliable. Hence the agency rejected that evidence, and fixed that rate base on original cost less depreciation. That action was affirmed by this Court. 237 Miss. at pages 218, 227-228, 113 So.2d at pages 644, 649."

"It was noted in the Hope Natural Gas case that regulation does not assure that the regulated business make a profit. 320 U.S. at page 603, 64 S.Ct. at page 288, 88 L.Ed. 333; see Federal Power Commission v. Natural Gas Pipeline Co.,315 U.S. 575, 590, 62 S.Ct. 736, 745, 86 L.Ed. 1037. All that was held was that a company could not complain if the return which was allowed made it possible for the company to operate successfully. There was no suggestion that less might not be allowed when the amount allowed was all that the company could earn. Without analyzing rate cases in detail, it may be safely generalized that the due process clause never has been held by this Court to require a commission to fix rates on the present reproduction value of something no one would presently want to reproduce, or on the historical valuation of a property whose history and current financial statements showed the value no longer to exist, or on an investment after it has vanished, even if once prudently made, or to maintain the credit of a concern whose securities already are impaired. The due process clause has been applied to prevent governmental destruction of existing economic values. It has not and cannot be applied to insure values or to restore values that have been lost by the operation of economic forces."

"The reproduction method does not fit in with depreciation and accountingPage 602methods. The annual allowance for depreciation under approved accounting methods is not the amount required to replace the existing unit, but the amount required to write off the cost of the existing unit when it is necessary to replace it. Under approved methods the actual cost of a car when replaced is deducted from the capital account, and the cost of the new car is added to the capital account. An allowance for depreciation estimated on reproduction cost is consequently inaccurate in proportion as the reproduction cost differs from the actual cost. As long as the science of accounts is predicated on actual cost it is inconsistent and confusing, in any proceeding to determine the cost of producing service, to base the allowance for depreciation on reproduction rather than actual cost."

"There is a vast deal to be said for the original-cost concept. It is accurate. It is practicable. It produces in short order figures which normally are not controversial. It involves materially less expense than determinations of value. And, since utility accounting is strictly supervised, original cost figures are not subject to such baleful adjectives as `speculative,' `conjectural,' `theoretical' and `imaginative'. * * *.

"Reproduction cost as such has been given a rough currying by commissions and courts for many years. * * *.

"Much reproduction-cost evidence doesnotgive consideration to technological advances — they have been pulse-quickening — and the conflicting opinions of experts produced some ludicrous disparities in earlier years."

"Changes in economic conditions,as indicated in an earlier chapter,must be considered in determining aproper return allowance.The effect of such changes is also important in considering cost of capital. At a time when interest rates and other capital charges are low, the cost of capital to a public utility company is correspondingly low. On the contrary, when capital costs are high, the utility company must pay more, to obtain capital. Questions then arise as to what capital costs shall be considered and the weight to be accorded inflation or deflation." (Emphasis supplied).

"A fair rate of returnis affected by changing economic conditions and other factors and cannot be fixed with extreme nicety. [Re Public Service Co. of North Carolina, 33 PUR3d 398 (N.C. 1960)] Continuing inflation emphasizes the statement made in the original volume thatprevailing economic conditionsand discernible trends for the future are factorsaffecting the return allowance."(Emphasis supplied).

"The Oklahoma commission, in fixing natural gas rates, said that the determination of rate of return, together with the determination of the rate base, constitutes the major controversial point of every rate case. Determination of thePage 603rate base was not a major controversial point, and the commission said it chose to adjust the rate of return to reflect changing conditions, which negated the necessity for changing the theory for determining the fair value and reasonable rate base. The commission fully considered the increased cost of money and determined that a rate of return of 6.25 per cent was fair and reasonable, although the company contended for a return of7.2per cent and in the last case involving this company the commission had allowed a return of 6 per cent." [Re Oklahoma Nat. Gas Co., 26 PUR3d 149 (Okla. 1957)].

"Inflation is a factor that cannot and must not be ignored in a rate proceeding. The Indiana commission prefers to take cognizance of such inflation by permitting the company a total dollar return that will take account of the situation in which inflation has placed it by determining the earnings requirement that will be necessary to provide for the cost of servicing funded debt, sufficient to render a return upon the common stock equity, and permit the company to attract equity capital. [Re Midwest Teleph. Co., 23 PUR3d 26 (Ind. 1958)].

"The New York commission, which has approved original cost rather than reproduction cost, said that adjustment should be made for the factor of inflation in the allowed rate of return when an investment rate base is used because the cost of replacing plant cannot be determined with exactness." [Re New York Teleph. Co., 20 PUR3d 129 (N.Y. 1957)].

"Efforts of utilities to protect against erosion of earnings due to such inflation have taken two paths: (1) Attempts to have rates based on a fair value rate base, or even depreciated reproduction cost; (2) attempts to seek compensation for inflation through a greater return allowance.

"There has been resistance on the part of those state commissions using the original cost rate base to giving recognition to price increases as a protection against inflation. The reasons assigned were generally as follows:

"First, only one class of investor, the equity owners, would be benefited. [Re Michigan Bell Teleph. Co., 91 PUR NS 129 (Mich. 1951)]. Thus, there would be discrimination even among common shareholders, giving a `windfall to those who purchased stock with inflated dollars as against those who purchased stock with prewar dollars.' [Re Wisconsin Electric Power Co., 93 PUR NS 97, 109 (Wis. 1952)].

"Secondly, it was noted that others suffer from inflation and that regulation should not operate to discriminate in favor of utility common stockholders since investors in utilities are treated no worse nor any better than those having fixed income investments, and consumers are as much entitled to protection against inflation as utility investors. [Re New York Telph. Co., 91 PUR NS 231 (N.Y. 1951)].

"Thirdly, inflation is already recognized in utility rates through operating expense allowance." [Re Wisconsin Electric Power Co., 93 PUR NS 97 (Wis. 1952)].

"The Missouri commission noted that the product of a formula using original cost and rate of return to determine net operating earnings is controlled by the amounts determined to be proper for the rate base and the rate of return. The commission then said:

"`Consequently, the commission can insure that the objectives of a particular rate case are met by adjusting anyPage 604one or both of the factors of the formula, and it is our opinion that the most satisfactory approach to obtaining that objective is to adjust the second factor (rate of return) and hold the rate base to an amount representing actual and known amounts of investment.'" [Re St. Louis County Water Co., 19 PUR3d 113, 121 (Mo. 1957)].

"* * * the judiciary ought not to interfere with the collection of rates established under legislative sanction, unless they are so plainly and palpably unreasonable as to make their enforcement equivalent to the taking of property for public use without such compensation, as, under all the circumstances, is just, both to the owner and to the public; that is, judicial interference should never occur, unless the case presents, clearly and beyond all doubt, such a flagrant attack upon the rights of property, under the guise of regulations, as to compel the court to say that the rates prescribed will necessarily have the effect to deny just compensation for private property taken for the public use. (Authorities cited)."

"A rate of return should not be unreasonable, whether considered from the viewpoint of the customer, the investor, or the utility company. A balancing of investor and customer interests must be obtained.

"It is the function of the commission to consider not only the interest of the utility but that of the general public as well, since the commission stands between the public and the utility. The commission looks to the total effect or end result to both the utility and the ratepayer, which, as provided by statute, must bePage 605the fixing of `just and reasonable' rates to both the investor and the consumer.

"If rates produce earnings which are below a fair and reasonable level, they are unjust or confiscatory to the owners of the utility property, and if the earnings are above such a level, they are excessive or oppressive to the ratepayers. It is essential to achieve an equitable balance between investor and consumer interests."

"It is fundamental to a proper test year that costs (both investment and operating) and revenues match, i.e., that they be consistent with each other. Unless there is a matching of costs and revenues, the test year is not a proper one for fixing just and reasonable rates. The inclusion of costs without matching revenues will produce excessive rates. The inclusion of revenues, without the matching costs will deny the utility reasonable rates. The relationship between cost and revenues for the test period used and the validity of that relationship constitutes one of the most vital areas in the determination of just and reasonable rates.

"If actual test year costs are adjusted to include costs associated with a higher level of revenues than prevailed in the test year, it is obvious that there is an improper matching of costs and revenues, unless the revenue level is also adjusted.

"The evidence is conclusive that the level of revenues that will prevail when the proposed plant additions are actually in service is in excess of the actual test year revenues. Yet, Company would adjust plant investment upward while ignoring the revenue side of the equation — a flagrant violation of test year principles."

"The fundamental error in the utility's position is that it would project investments in plant facilities into the future but would not make any allowances for a reasonably to be anticipated increase in income which the additional and more efficient facilities would produce. The utility would, in effect, apply the 1956 income to the rate base of a subsequent year to determine a fair rate of return. We are agreed that the action of the commission in deleting this item from the 1956 rate base in its computation to determine the actual rate of return for 1956 was proper."

"The law is well settled that property not actually used and useful does not properly belong in the rate base. * * * Only the reasonable value of property which is actually being used should be included in the rate base in determining a fair rate of return. Willcox v. Consolidated Gas Co.,212 U.S. 19, 29 S.Ct. 192, 53 L.Ed. 382."

"Staff and Company (Utility) do not differ greatly as to the amounts required for cash working capital and for materials and supplies for ordinary operation and maintenance. The combined amounts are in the range of $151,850 to $158,000. The disagreement arises, not from the exact amount, however, but as to whether any allowance for working capital is required as a rate base component under the record in this proceeding.

"If investors must provide the funds for working capital, the investors are entitled to a return on these advances and this is accomplished by including the working capital requirement in the rate base. If, however, working capital funds are available from other sources and relieve the investor of the necessity for providing them, no allowance in the rate base for working capital is required. On these principles there is no disagreement between Company (Utility) and Staff.

"The evidence shows that at all times during the test year, 1966, the `lag' between collection and payment of property tax alone ranged between $311,411 and $549,910, or a monthly average of $424,217, a sum far in excess of either the Staff's or Company's (Utility's) working capital computation. These funds, produced by rates collected from consumers, are available to Company (Utility) for working capital purposes. Company (Utility) agrees that accrued property taxes, if available, may be used to offset the needPage 607for a working capital allowance, but it argues that such offset may be applied only against the cash working capital component and not against the materials and supplies. We find that working capital actually provided through the lag in payment of accrued property taxes is available in an amount sufficient to eliminate the need for a working capital allowance in the rate base. We find also that Company's (Utility's) argument is untenable. We believe that such argument does not meet the fundamental rationale involved. We believe there is no distinction between the two components insofar as the credit for tax accruals is concerned because the equitable and controlling consideration is whether investors or rate payers do in fact supply the capital to Company (Utility). To the extent that the rate payers are the contributors, they are entitled to have that contribution taken into account. Therefore, we find that no allowance for either component of working capital should be included in the rate base."

"Company in the year 1966 charged donations in an amount of $3,490 to expenses to be borne by its customers. Staff concurred in the desirability of donations as a matter of principle, but took issue with the inclusion of the donations as a charge against the rate payers.Page 608Staff's position is that when such donations are made, they should be from the Company's earnings.

"Regulatory commissions have been on both sides of this question, but the weight of authority regards donations as chargeable against the stockholders. We believe this is the better rule. When the Company supports worthy charities and civic groups, and we trust it will continue to do so, the funds should be from the earnings and profits of the Company. The donations should not be made at the expense of the customers without their knowledge or consent. Customers make their own contributions based on their own decisions. They should not be required to make donations involuntarily through charges in their utility rates."

"If charitable contributions are allowed as an operating expense of a monopoly, it amounts to an involuntary levy on the rate payers. Many courts and commissions have, on this premise, required the utility itself to bear the burden and not to pass it on to the subscribers. See Central Maine Power Co. v. Pub. Utilities Comm.,153 Me. 228,136 A.2d 726, 731; Peoples Gas Light Coke Co. v. Slattery,373 Ill. 31,25 N.E.2d 482, 498; Carey v. Corp. Comm.,168 Okla. 487, 33 P.2d 788, 794."

"If X Company, with $1,000,000 of depreciable plant, applies straight-line depreciation for the purpose of computing its federal income taxes, it may be allowed (for example) a depreciation deduction of $30,000, but if it uses one of the liberalizing methods, its depreciation deduction may be $60,000. Assuming a fifty per cent tax rate, X Company would reduce its current income-tax liability $15,000 by `liberalizing'. If `normalizing' is allowed, X will credit the $15,000 to a reserve for deferred taxes, invest it in used and useful property, and perhaps earn a return on that investment. But if `flow-through' is required, the $15,000 will be treated as a saving and will be available for the reduction of rates."

"The `flow-through' method is used by federal regulatory agencies and by many state commissions. In our judgment itPage 611is the method that accords with fact and is just and equitable to consumer and utility.

"Consequently, we shall use the `flow-through' method in this case and the expense item for deferred Federal income taxes of $69,889 will not be allowed. This treatment will only require the Company (Utility) to continue its past practices with respect to this item for as the notes to the Company's (Utility's) financial statement as well as testimony disclose, Company (Utility) has not been following deferred tax accounting practices respecting liberalized depreciation."

"The Iowa state commerce commission shall regulate the rates and services of public utilities to the extent and in the manner hereinafter provided.

"As used in this chapter, `public utility' shall include any person, partnership, business association, or corporation, domestic or foreign, owning or operating any facilities for:

"1. * * *

"2. * * *

"3. Furnishing water by piped distribution system to the public for compensation."

"The commission shall have broad general powers to effect the purposes of this chapter notwithstanding the fact that certain specific powers are hereinafter set forth."

"No public utility subject to rate regulation shall make effective any new or changed rate, charge, schedule or regulation except by filing the same with the commission at least thirty days prior to the effective date thereof. The commission, for good cause shown, may allow changes in rates, charges, schedules or regulations to become effective on less than thirty days' notice.

"* * *

"Whenever there is filed with the commission by any public utility subject to rate regulation any new or changed rates, charges, schedules or regulations, the commission may, prior to the effective date thereof, docket the case as a formal proceeding and set the case for hearing. The commission shall give such notice of such formal proceedings as it deems appropriate.

"After the initiation of such formal proceedings and pending the final decision thereon, the commission may, at any time before they become effective, suspend the operation of such new or changed rates, charges, schedules or regulations, but not for a period longer than twelve months from the date when they would have become effective if not suspended.

"However, a public utility shall have the right at any time after said rates, charges, schedules or regulations have been suspended for ninety days to place in effect any or all of such suspended rates, charges, schedules or regulations by filing with the commission a bond or other undertaking approved by the commissionconditioned upon the refund in amanner to be prescribed by the commission of anyamounts collected thereunder in excess of the amountswhich would have been collected under rates, charges,schedules or regulations finally approved by thecommission."(Emphasis supplied).