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4 N.J.A.R. 1

South Orange Avenue Bus Association, In the Matter of the
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Citation: 4 N.J.A.R. 1
Decision Date: 1980
Synopsis: The South Orange Avenue Bus Association, a group of 11 separate corporations providing regular bus service, petitioned the Department of Transportation for a rate increase. The administrative law judge assigned to the case determined that there were four issues to be resolved before granting an increase: (1) whether or not the requested fare increase was just and reasonable; (2) whether or not the peitioner could be excused from the normal requirement of proving a rate base by virtue of the exception set forth in N.J.S.A. 48:2-21.2, (3) whether the Hebrank formula is the appropriate method for determining rider resistence to a fare increase, and (4) whether an across-the-board increase in expenses as a result of inflation is warranted? The administrative law judge found that the fare presently charged by petitioner did not enable it to meet average operating expenses because of the great increase in operating costs and in the rate of inflation. Since the gross operation of the revenues of the Association would. exceed the depreciated book cost of the property used and useful in the company's business as a public utility, the judge ruled that the petitioner could be excused from providing a rate base. While commenting that it might have been better practice to examine the experience of comparable bus lines, the judge determined that the traditional Hebrank formula could be used to project revenues if a fare increase were to be granted. Additionally, the judge took official notice of the rate of inflation in projecting an allowable rate increase, but did not permit the petitioner to use an across-the-board 12 per cent increase in expenses to account for inflation. Instead, the judge reviewed each of the petitioner's expenses in an effort to determine whether the requested increase was a reasonable one. Concluding that the petitioner had shown by a preponderance of the competent and credible evidence that the requested fare increase was reasonable, the judge ordered that the requested increase be granted. In Re: South Orange Bus Assoc. Martin Fox, Esq., for Petitioner (Fox & Fox, attorneys) Musha Wyner, Deputy Public Advocate, and Yvette Kelly, Deputy Public Advocate for the Office of Rate Counsel (Stanley C. Van Ness, Public Advocate, attorney)