The Washington times., 1911-04-22
MERGER BEHIND
GUT IN GAS RATE
IN GEORGE TOWN
Companies to Build New
$5OO,O0O Plant At
Once.
Continued from First Page)

to the Georgetown company at 40 cents.
This. says Col. R. H. Goldsborough
counsel for the Washington company,
represents about the cost of the gas to
the Washington company at the holder,
exclusive of charges for distribution. for
dividends and interest, for. taxes, and
for depreciation. The colonel said toe
day:
''It is the purpose of the Washington
company TO provide the Georgetown
company with gas merely while the new
Georgetown plant is being constructed
The Washington company doesn't eX-
pect to make any money on 1t. We will
furnish 1t practically at cost
Margin, for Company.
It Is apparent that If gas costs the
Washington company 40 cents-which is
a very liberal estimate-the company
enjoys a wide margin for taxes. depre-
citation. distribution and profits. That
margin, in fact is just 45 cents. This
squares very nicely with the statement
of gas experts before the House Dis
trict Committee last spring. that the
cost of gas to the Washington COM
pany, including every charge. was 81
cents At that time the price was 80
cents, and the company's profits were
the difference between 80 and 81, or 50
cents on each 1000 feet sold.
This was one of the reasons the mo-
nopoly couldn't resist the demand for
further reduction in price; it partially
explains the cut from 80 to S5 cents on
July l last.
This 4O-cent rate to the Georgetown
company is also undoubtedly partially
responsible for the plan to reduce prices
in the suburb. concern that pays ~
cents for its gas could hardly have the
nerve to charge 81 for 1t from the con-
Humer.
One or two legal difficulties may be
encountered by the Washington COM
pany in selling to the Georgetown COM
pany at 40 cents. The washington
company will have to sell the ga In
Its own territory, or at the boundary,
for it cannot do business In Georgetown
This, however, can probably be ar
ranged Another question is whether
the Washington company has authority
TO sell to anybody at less than Its cur
rent rate. The companys charter con-
tains the following provision on this
THAT the price which may be
charged for gas by the Gas Light
Company in the District OF Columbla
shall be uniform and the same to all
consumers, and any reduction made
in the price or cost to any person or
persons, except to officers of the COM
pany, shall furnish legal right on
the part of any ether person or per
sons to demand gas at the same cost
or price"
Col. Goldsborough's Version.
Colonel Goldsborough today made
the following statement on this ques-
ton:
I'VE are ready to take our chances
on being called to account for selling
to the Georgetown company at less
than we sell to the ordinary con-
sumer We contend that the George
town company is not a consumer, to
start with and we believe no court
would prevent our selling to 1t or
would try to make US sell at the
same rate to the general public Our
purpose in selling at the reduced rate
to the Georgetown company is to en-
able 1t to reduce its prices to the
only temporarily. while 1T is estab-
1ishing its own plant to enable 1t to
sell cheaper gas. We believe public
policy justities our course"
The Georgetown company does a
business of about $l25.000 a year. and
for several years has paid dividends
of 10 per cent on $150000 1t has
outstanding S225,0O0 in certificates of
Indebtedness, which were sold two
years ago for cash al par. The COM
pany estimates the value of its prop
critics at about $500 large part
of which was created by reinveSt-
ment of surplus.
The minority interest in the George
town company is almost wholly local, |
and the concern has its own officers
and directors, the Washington COM
pany's interest being represented by
but one director. When the negotiG- |
tions with the Washington company
are completed. bonds will be issued to
obtain money with which to build the
new plant.
1t is announced by Colonel Colds |
borough that the controlling interests |
In the two companies hope ultimately |
to consolidate the gas corporations |
One of the purposes. he says, in build |
Ing a new, up-to-date plant in George |
town, is to provide a manufacturing |
establishment, in order to give the con- |
solidated company adequate facilities for |
furnishing gas to the community.