Evening star., 1923-03-15
Citizens Federation Objects
to Income Tax as Charge
Against Operating Costs.
ALSO WOULD DEDUCT
PROPERTY DEPRECIATION
Two Accounts Aggregate $4,000,
Geo, Lawyer Declares, in
Statement.

Payment of federal income tax nv
the Potomac Electric Power company
out OF its current revenues as an
operating expense is opposed by the
Federation of Citizens Associations
In brief filed with the utilities com
mission today by William NICK.
Clayton.
The federation also advances the
argument that "the depreciation
should always be deducted from the
valuation found and allowed as a
base upon which to compute a rate of
return"
These two ACCOMPLISHMENTS tax and
depreciation aggregate close to
100000, and their treatment by the
commission means loss or gain 10
the consumer Of over 5000, 900 yearly"
Mr.. Clayton declared.
Questions Company's Right.
Walter G. Allen, executive secre-
tary to the commission, said today
the commission has questioned In the
past the right Of the company of
taking income tax out of curren,
revenues.
He also declared that in the rate
hearing few weeks ago the com
mission brought up the question OF
what should be the proper treatment
OF the depreciation account especial
~ when money is taken from tina,
fund and put back into the property
1t was indicated that the commits
sion VIII have something to say abou,
both these matters in its rate de-
cision to be issued early next week.
Clayton Files Statement.
Mr.. Clayton was unable to attend
the recent electric rate hearing. and
Tor that reason asked permission to
me NJ ms written statement today. II
follows, in part:
THE federation again enters its
protest against the continued practice
OF the commission OF the allowance
in full and their addition to the val
uatfon base established In 1916 a,
book value. of all property additions
m ade by the company since the com
missions S valuation of the year
named. The valuation found by the
commission of the company as of 1916
lars.
PreAent Valuation, sI8.4OO, 900.
THE valuation now claimed by the
company and used by the commission
as a base upon which to figure a rate
OF return is nineteen million -four
hundred thousand $19.40O.0OO) dol.
| lars. SO that seven million Of the now
rany has never been appraised, valued
| or passed upon in review by the com.
mtssion-but the company is per.
mttted to add all additions at full
| book cost 20 the original valuation
| base.
This. We contend. is contrary to the
intent and purpose of the public
utilities act and cannot but work
great damage and hardship to the
purchasing and consuming public.
m iSc OF ilar II
acted and ruled in 1916 when it ap-
praised the then property Of the com.
pany. IS il has since and is now do
!, ing, 1t might then easily have allow &c
the book value claimed by the COM
pany of it's property, viz. $4,000. 900
instead of the commissions valuation
and appraisal of that property at $12,.
100000.
Decrease in Real Estate.
'"The commission. Of course. will
take judicial notice. without the pro-
duction Of direct testimony, that the
rate of interest asked in commercial
and real estate circles In the Distric,
of Columbia has decreased consider
now in force were last fixed by the
commission. and be 1t further noted
that the rates the commission now
fix in this case will extend into and
InGOueH luIuIt pSTIou OI time, our
ing which period interest charges will
still further decline.
THE Potomac Electric Power Com
pany is without competition in the
District of Columbia.
THE commission should take into
consideration. in fixing the rates for
the coming year, the rates of return
enjoyed by the company for the past
two years.
Should the commission find that
the rate of return has been largely in
excess of a fair or normal rate for a
considerable period of time, the pub
lie should be recouped for excessive
payments of one period by the rate
fixed for the successive period.
Higher Rates Claimed.
1.-The public utilities companies them
selves or some Of them have claimed
before the commission the right OF
higher than normal or fair tolls and
charges over a set period of time to
compensate them for less than nor
NAL rate earned by them through a
preceding period-and In one case a,
least the commission allowed the
claim of the company.
The federation asks it's application
now by the commission in the present
case What is sauce for the goose
should be sauce for the gander
THE commission Is respectfully re-
quested to incorporate in its order
what 1t says the rate of return was
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