Dissenting Opinion by
Rhodes, P. J.:I dissent from the conclusion of the majority. I would affirm the order of the Commission. The majority opinion reverses the order of the Commission and remits the record with direction to apply the remainder life theory in computing Duquesne’s annual depreciation allowance. Having assumed the genuineness of the deficiency in the book reserve in a prior proceeding, the Commission might have allowed the additional annual depreciation of $412,000 under the remainder life theory in this case. The Commission, if it concluded the circumstances warranted, could have accepted the utility’s book estimate and this would have been within the sphere of its authority. Harrisburg Steel Corporation v. Pennsylvania Public Utility Commission, 176 Pa. Superior Ct. 550, 109 A. 2d 719. But the Commission is not obliged to repeat or perpetuate an error and we should not require it to do so. The addition of $412,000 to annual depreciation as directed by the majority may not be important in so far as the amount is concerned when considered in relation to Duquesne’s allowable annual operating expenses, but the principle involved is of far-reaching consequence to the regulatory process. The majority of this Court *595are attempting to substitute tbeir judgment for the discretionary power of the Commission. The result of this unwarranted interference with the prerogatives of the Commission is to direct Commission action on what is essentially an economic problem.
Preliminarily it is well to remember that the regulation of public utilities, including the exercise of the rate making power by the Commission, is not an exact science, and calculations cannot always be made with mathematical precision. This is illustrated by reference to the recent history of this utility. The Commission in its order of March 9, 1953, in holding that tariff No. 11 was not unreasonable or discriminatory, found that allowable revenues were excessive in the amount of $652,739. The Commission nevertheless decided that it was impractical to design rates that would reduce revenues within such narrow limits; and Du-quesne has thereby been permitted to receive this excess in annual revenues. See City of Pittsburgh v. Pennsylvania Public Utility Commission, 171 Pa. Superior Ct. 187, 90 A. 2d 607; Duquesne Light Company v. Pennsylvania Public Utility Commission, 174 Pa. Superior Ct. 62, 99 A. 2d 61.
In its order of August 29, 1951, the Commission allowed Duquesne $4,998,282 for annual depreciation on its plant. The annual depreciation allowance on Duquesne’s electric plant consisted of straight-line reserve allowance of $4,554,727, and a remainder life allowance of $443,555. Duquesne there contended that the Commission’s allowance for annual depreciation should be based upon replacement cost at current prices. We recognized that allowance for annual depreciation should be calculated to permit the utility to recover the original cost of its property; and we sustained the Commission’s calculation .of the allowance for annual depreciation, being necessarily a judg*596ment figure. City of Pittsburgh v. Pennsylvania Public Utility Commission, supra, 171 Pa. Superior Ct. 187, 212, 213, 90 A. 2d 607. Under the facts of that rate proceeding the application of the remainder life theory was discretionary with the Commission. In the present proceeding the Commission had the power to determine that the remainder life theory should not be applied, and its conclusion is based upon substantial reasons.
In the present order of December 22, 1953, the Commission made an annual depreciation allowance to Du-quesne of $6,529,377, including Elrama No. 2 power plant. It is conceded that on the basis of the reserve requirement study there would be a deficiency in Du-quesne’s book reserve for depreciation. The Commission refused to amortize this deficiency by making provision for it in the annual depreciation charge. Du-quesne claims that this resulted in confiscation of $12,-000,000 of the original cost of its property.
The allegation of confiscation must be sustained by the evidence submitted by the utility, and the Commission is not obliged to establish the nature or validity of an inadequacy in the utility’s book reserve. It is only upon proof by the utility or upon an assumption that the deficiency in the book reserve was due to the utility’s insufficient past earnings or collections from consumers to compensate the utility for property consumed in rendering past service that it can be said that Duquesne will not receive over the expected service lives of the units of property their full original cost. Present rate payers are not to be charged for a failure of a utility to allocate adequate amounts to its book reserve for depreciation whether such bookkeeping entry is intentional or the result of erroneous methods. The correction of a utility’s book reserve for depreciation should be made through surplus in the *597absence of evidence acceptable to the Commission that the deficiency is genuine. If genuine it would be proper to amortize the deficiency as an operating expense over the remaining expected service life of the property units. See Northwestern Wisconsin Electric Co., 40 P.U.R. (N.S.) 202, 204.
Depreciation is defined as the expense occasioned by the using up of physical property employed as fixed capital.* An annual depreciation allowance in rate making is an expense item designed to permit the utility to recover over the estimated service life the original cost of the property devoted to the public service. In making such allowance the Commission must be guided by the record before it. Its findings must be supported by evidence, and the weight to be given any particular item of evidence is for the Commission. To avoid confusion and misunderstanding it may be expedient to employ an elementary approach and analyze the problem presented by the utility’s claim of confiscation by reason of the Commission’s failure to take into account the alleged deficiency in its book reserve in arriving at an annual depreciation allowance. The term “deficiency in the book reserve for depreciation” means only that the total amount recorded on the utility’s books in the reserve for depreciation account is less than the amount which is indicated by a present reserve requirement study, which is an analysis of the utility’s recent experience in retiring from service its units of property for various causes. The question presented can be readily understood by use of a concrete, simplified example as given by the Commission in its brief in these appeals. Let us assume a unit of property *598costs $15,000 when installed, and that the estimated service life on the books of the utility at installation was fifteen years. Annual depreciation credited to the book reserve would be $1,000 per year and at the end of five years the book reserve would be $5,000. Assume that at the end of five years a present reserve requirement study based on the latest available evidence shows the proper estimated service life at ten years instead of fifteen years as computed in the book reserve. Ignoring for the moment the book reserve, under the present reserve requirement study the proper annual depreciation allowance, representing the true current annual depreciation expense chargeable to present cost of service, would be $1,500, that is, a ten-year life at $1,500 per year would recover an original cost of $15,-000.
Briefly, the remainder life theory if applied requires that the Commission consider any deficiency (or excess) between the book reserve or any prior depreciation study and the present reserve requirement study, and add to the annual depreciation allowance (or in case of an excess to subtract) an amount sufficient to cover over the remaining service lives the deficiency or excess. In this illustration if the book reserve is to be accorded full weight due to the change in estimated service life from fifteen to ten years there is a deficiency in the book reserve of $2,500; $7,500 should have been accrued on the books in half the life of the property, to wit, five years, instead of $5,000 which the books actually show. Where the Commission applies the remainder life theory it makes an additional allowance (in this example $500 a year, $2500/5 yrs.) sufficient to permit the utility to amortize the deficiency, which it has created, over the remaining estimated service life of the property. On the other hand, if there was an excess of $2,500 between the book re*599serve and the present reserve requirement study, the same principle would apply and the Commission would reduce the annual depreciation allowance by $500 per year if it applied the remainder life theory. Extending the life of the property on the books and thereby reducing the annual amount entered in the book reserve for depreciation regardless of adequate earnings, increases the amounts available for dividends or other reserve.
The Commission presents two reasons why it should not be compelled to apply the remainder life theory in any given case.
First, the Commission argues that application of the remainder life theory should depend on whether it is established, in a given ease, that the deficiency, or excess, between the present study and the book reserve is in fact genuine, as distinguished from a mere difference between the two estimates. The genuineness of the deficiency, or excess, in turn hinges upon the question whether the ptility in the past made more or less than a fair return (on fair value) over the years in question. If there is a deficiency and the utility has earned no more than a fair return on fair value then the deficiency would be genuine. Where there is a deficiency and the utility has in fact earned more than a fair return, to the extent that the utility has earned more than a fair return, the deficiency has no validity. Where an excess appears in the book reserve and the utility has earned at least a fair return on fair value the excess may be considered genuine. But where the utility has not earned at least a fair return the excess would to that extent be false.
Secondly, the Commission takes the position that, since it is a practical impossibility to try a rate case involving prior years, the Commission cannot be required to apply the remainder life theory in any given *600case, but may properly base its annual depreciation allowance on the present reserve requirement study (the latest available evidence) which represents the true current annual depreciation expense chargeable to present cost of service. The Commission states in its brief: “Thus, the Commission now reasons that the present depreciation expense incurred in furnishing present service is the only proper basis for determining allowable operating expenses and that to amortize either a deficiency or an excess by increasing or decreasing present depreciation expense is to distort the present cost of property consumed in rendering service.”1
I think the answer is obvious when the problem is thus analyzed. The Commission should give the utility everything to which it is entitled. This is done when it makes a reasonable annual depreciation allowance based upon a present reserve requirement study, which is a sufficient basis for recovery of full original cost. This conclusion is fortified when we consider the nature of an annual depreciation allowance in relation to accrued depreciation. In Clark's Ferry Bridge Company v. Public Service Commission, 108 Pa. Superior Ct. 49, 74, 165 A. 261, 270, we said: “. . . annual depreciation should bear some fair relation to the accrued depreciation. We do not mean to say that they should be calculated on the same basis, for the accrued depreciation represents the actual depreciation which has occurred and which may be discovered by inspection and examination, while the annual depreciation allowance is a theoretical allowance made from year to year, ...”
*601There is no logical or rational basis upon which the majority directs the Commission to apply the remainder life theory in this case. Reversal of the Commission’s order is not upon the ground of confiscation which is urged by the utility. The majority states that the present record shows no abuse of discretion by Duquesne relative to the creation of its book reserve. The validity of the deficiency is assumed by the majority and a correlation of the present reserve requirement study with the book reserve or a prior finding of depreciation thereupon becomes mandatory. As a consequence of such judicial interference with the Commission’s administrative powers consumers may be required to compensate a utility for its investment more than once. The Commission in some cases has also acted upon the assumption that the mere fact of the existence of a deficiency in the book reserve for depreciation established that the utility’s past collections from consumers were in fact deficient. Such assumption, inherent in the application of the remainder life theory, is that the utility is always earning precisely a fair return, no more and no less. But, as the Commission says: “Considering the problem as solely one involving the amounts charged in the past on the books of account as depreciation expense ignores the more cogent and determinative questions of past earnings and present cost of service.” Of course the findings of annual depreciation in previous cases are not res judi-cata. The annual depreciation' allowances vary under changing conditions as appears by reference to the respective proceedings' involving Duquesne, and no formula can be prescribed by this Court controlling the Commission’s administrative powers in- such matters.
A fundamental error in the majority opinion is an assumption, that the Commission’s. refusal to give weight to the deficiency between the book reserve and *602the present reserve requirement study results in an annual depreciation allowance which will not enable the utility to recover the full original cost of its property. It is erroneous to say that unless the deficiency in the book reserve is taken into account full original cost will not be recovered. True, the Commission says in its brief that, “based on the amount of the Commission’s allowance for annual depreciation expense in this case, Duquesne will not receive over the expected service lives of the units of property their full original cost.” The majority has entirely misconstrued the limited import of this statement. Fundamentally, as the Commission points out, an annual depreciation allowance based on a present reserve requirement study alone represents the true present cost of service and gives the utility its full rights in a rate proceeding, that is, recovery of full original cost on the basis of the present reserve study used. Consequently, the Commission meant only that where full weight is accorded the book reserve, in comparison with the present study, then any variation shown must be taken into account in order to insure recovery of full original cost. Of course, if by hypothesis the Commission must give full weight, or any weight, to a deficiency in the book reserve, it will have to take such deficiency into account in arriving at an annual depreciation allowance that will allow recovery of original cost. To accept the deficiency or the book reserve at face value is to assume that prior , accrual rates have been genuinely deficient, and hence the deficiency must be taken into account in order to recover full original cost.
Essentially, the problem is one of the weight to be given to evidence by the Commission. It can disregard the book reserve and base annual depreciation entirely on the present reserve study, or it can give some weight *603to the book reserve or even full weight thereto.2 The majority opinion recognizes this power of the Commission in affirming the Commission’s determination of accrued depreciation, but denies it when the Commission considers annual depreciation. Under the heading “Accrued Depreciation” the majority opinion states: “The Commission had before it the following: a reserve requirement study by the City, a reserve requirement study by Duquesne, the finding of the Commission in the prior rate proceeding, and the book reserve. The Commission did not consider the book reserve controlling since it had not been accumulated on actual service life but from percentages of revenues and by lump sum appropriations from surplus.”
The only logical rule, therefore, is that the Commission should have discretion as to what weight, if any, it will give to the book reserve in a given case as compared to the present reserve study. For instance, admittedly here the book reserve was computed *604primarily on gross revenues and not at all on any study of service lives or rate of annual depreciation. On the record the Commission was entirely justified in giving no weight to the book reserve, that is, refusing to apply the remainder life theory. There was no proof of confiscation shown, as alleged by the utility. In any event, the burden is upon the party alleging it to prove confiscation. “The point is as to the necessity for the annual charges for depreciation, as made or claimed by the Company, in order to avoid confiscation through the rates in suit. On that point the Company has the burden of proof.” Lindheimer v. Illinois Bell Telephone Co., 292 U. S. 151, 54 S. Ct. 658, 78 L. Ed. 1182, 1197. Duquesne made no attempt to meet that burden.
The majority opinion relies upon several erroneous grounds for directing the Commission to apply the remainder life theory in this case. In the majority opinion it is said: “. . . there is nothing to show that the Company was guilty of any faulty past practices in accumulating its book reserve, or that the conceded deficiency therein is not genuine. In fact, in 1937 the Commission expressly approved the Company’s reserve for depreciation and its annual accruals. . . . The present record shows no abuse of discretion by Duquesne, nor is any such abuse asserted. ... we are not to be understood as indicating that the remainder investment approach should always be followed. In the case at bar, however, we cannot now approve a complete change in policy to the Company’s prejudice.” .....
(1) Alleged approval of the utility’s reserve in prior proceedings was expressly limited to’and for the purposes of the particular proceeding. Assuming such approval was made in prior proceedings, it . does not bind the Commission here. Prior rate proceedings or the particular findings therein are not res judicata of *605subsequent rate cases. Philadelphia v. Pennsylvania Public Utility Commission, 173 Pa. Superior Ct. 38, 52, 95 A. 2d 244; Pittsburgh v. Pennsylvania Public Utility Commission, 174 Pa. Superior Ct. 4, 98 A. 2d 249.
(2) The fact that the Commission applied the remainder life theory and allowed Duquesne to amortize an alleged deficiency in the book reserve in the 1951 proceeding does not, by any logic or reason, require this Court to direct the Commission to apply such remainder life theory here. In the 1951 proceeding the Commission applied the remainder life theory and we affirmed such action. Pittsburgh v. Pennsylvania Public Utility Commission, 171 Pa. Superior Ct. 187, 90 A. 2d 607. Here the Commission refused to apply the remainder life theory, and the question raised is whether it is bound to apply the theory under a plea of confiscation by the utility. This question was not involved in the 1951 case. Approaching the problem on the basis of fundamentals, it is clear that, where the Commission applies the remainder life theory, its action is not necessarily erroneous, but the Commission is not bound to apply such theory in any given case, any more than it is precluded from changing its prior approval of a fuel adjustment clause in the exercise of its functions as an administrative agency of the legislature. Let us suppose an excess, rather than a deficiency, in the book reserve was involved here. I am confident that the utility would vigorously protest against application of the remainder life theory- and the consequent deduction from-its annual depreciation allowance. The underlying principle is the same. Former application of the remainder life theory, even involving the same utility, does not determine the present question one way or the other.
*606(3) The exercise of discretion by utility management and observance of Commission rules regarding annual depreciation accruals are not here involved. The case of Pittsburgh v. Pennsylvania Public Utility Commission, 370 Pa. 305, 88 A. 2d 59, has no application to the present appeals. The question there was whether ratepayers or stockholders should be charged with an admitted actuarial deficiency in the pension fund. Here the question is whether an alleged deficiency between book reserve and a present reserve study is genuine, and whether such deficiency ipso facto must be accepted by the Commission in computing a reasonable annual depreciation allowance.
(4) For like reasons, we are not concerned, as the majority assumes, with questions of fairness, prejudice, estoppel, or change in Commission policy. The Commission’s refusal to continue to accept at face value self-serving book entries of a utility would not be a prejudicial change of policy.
The majority directs the Commission to make adjustment for a wage increase, not in the record, since the Commission made an adjustment to reflect the elimination of the excess profits tax. Admittedly, the Commission should consider the latest available relevant evidence in computing expenses and income, but, at the same time, it is given discretion as to what adjustments shall be made to base year figures. Duquesne Light Co. v. Pennsylvania Public Utility Commission, 174 Pa. Superior Ct. 62, 69, 99 A. 2d 61. In the exercise of its discretion the- Commission made the adjustment to reflect elimination of the excess profits tax, but refused to consider a wage increase which was not in the record. In directing the • Commission to taire into account the wage increase, or eliminate it and the tax item, the majority is again arrogating to itself an exclusive function of the Commission.
*607In its final order of December 22, 1953, in these appeals the Commission found the proposed rates in tariff No. 12 to be unfair, unreasonable, and unlawful. The Commission went further and modified the fuel clause proposed by Duquesne in tariff No. 12, which was substantially the fuel clause contained in tariff No. 11. This modification of the fuel clause, prescribing a variable instead of a fixed thermal efficiency factor, was designed to limit the application of the fuel clause to fuel expense actually incurred. It was estimated that such modification in the fuel clause would, on the basis of current fuel cost, produce a reduction in payments by industrial consumers subject to the fuel clause of $1,811,000.
The majority opinion affirms the Commission in directing modification of the fuel clause. However, throughout the majority opinion language is used which treats this order of the Commission modifying the fuel clause as making a reduction in basic rates or revenues therefrom. Under the principles announced in Magee Carpet Co. v. Pennsylvania Public Utility Commission, 174 Pa. Superior Ct. 438, 102 A. 2d 229 (allocatur refused), it is clear that a fuel adjustment clause has a limited purpose, that is, to provide for the adjustment of charges for service to a consumer to directly reflect the changing fuel cost to the utility. The modification of the fuel clause in this case had no effect on the basic rates or allowable revenues; and the resulting change in receipts under present fuel costs cannot be considered a change in basic rates or a reduction in allowable revenues. In the Magee case we said (page 447 of 174 Pa. Superior Ct., page 234 of 102 A. 2d): “A fuel adjustment clause should stabilize, not augment, the allowable return of the utility from its basic rates.” For these reasons it is obvious that the majority ruling — that under the language of *608section 308 of the Public Utility Law, 66 PS §1148, the Commission may on an application for increase in rates direct a reduction in existing rates and revenues — is entirely beside the point and has no relevancy to the issue.
“Broadly speaking, depreciation is the loss, not restored by current maintenance, which is due to all the factors causing the ultimate retirement of the property.” Lindheimer v. Illinois Bell Telephone Co., 292 U. S. 151, 167, 54 S. Ct. 658, 78 L. Ed. 1182, 1192.
The Commission in its brief (pp. 77-83) gives a convincing illustration of tbe inequitable results from tbe application of tbe remainder life theory solely on tbe mere presence of a deficiency or an excess in a utility’s book reserve for depreciation.
In Harrisburg Steel Corporation v. Pennsylvania Public Utility Commission, 176 Pa. Superior Ct. 550, 109 A. 2d 719, a present reserve requirement study revealed that the balance in the company’s book reserve for depreciation was $9,711,287 less than the accrued depreciation indicated by the reserve study as having actually occurred. The company thereupon transferred $5,000,000 from surplus, subject to the approval of the Commission, and in its rate proceeding proposed to amortize the remaining deficiency of $4,711,287 as an allowable operating expense over the remaining average service life of the property. The Commission,' in amortizing the deficiency, allowed $118,250 annually as an operating expense for rate purposes, having accepted within the sphere of its authority the company’s estimate. We affirmed the Commission in applying the remainder life theory under the circumstances and increasing the annual depreciation allowance accordingly.
In Pennsylvania Public Utility Commission v. Equitable Gas Co., C. 15581, August 11, 1953, the Commission refused to amortize an excess in book reserve by decreasing the depreciation expense allowance.