The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1925-03-20
CUTS SEEN
IN PHONE
COSTS
Commissioners Bell Moves to
Reduce SIS. 900, 900 valu-
ton About $500, 900

The first indication that the
Public Utilities Commission plans
to slash materially the $25, OO0. 900
valuation of the Chesapeake and
/ Potomac Telephone Company,
came today at the valuation hear
| ing in the District Building.
/ Engineer Commissioner J..
Franklin Bell, through cross
examination Of company witnesses,
brought out that the Commission
believed that accrued depreciation
should be deducted from repro
duction value. This amounts to
$500, 900.
/ Dozier A. De Vane, general
counsel Of the company, contended
that only $1,SOO,OOO, the actual
] physical depreciation of the COM
pany's property, should be
deducted.
difference OF $1,7O0, 600.
The difference in this item be-
fwesn the commission and company.
las indicated today, Is $1.7oO. 900.
De accrued depreciation fund "
GtualIy s4s4SS. 900, but this includes
gift of 1886 900 to the local COM
lpany from the American Tele-
phone and Telegraph Company.
There is possibility the com.
mission may also decide to deduct
this contribution.
Commissioner Bell brought out
lat today's hearing that the public
was paying return twice on some
of the companys depreciation
"From what I understand of the
uresent practice Commissioner
Ben said, the company places say
/ 500 900 in it's depreciation reserve,
this amount being taken from OPP
Grating expenses.
Must Pay Return.
Instead of keeping this amount
Intact in the reserve, the company
reinvests it in the company.
when it goes back into the
company, then the public must
4 pay a return oh IL OSS@S
added to value.
I'm other words, the telephone
CONSUMERS pay return on the
Imoney in the depreciation return
land another return on the same
money when it is reinvested in
the property. That is duplication.
i Counsel De Vane, in replying, de-
clared it was an error OF law 10
treat accrued depreciation as actual
depreciation of the property. He
said in some instances the accrued
and actual depreciation may be the
same.
In this case, it was brought out.
there is a difference of nearly
sN Mr. De vane said that the 81, 800,
900 depreciation figure used by the
, phone company in it's valuation was
physical depreciation of the corpo-
ration's property.
Discusses Regulations.
Mr.. De Vane then went into a
long discussion of the public utility
regulations. He said that Commits
sioner Bells contention on valuation
might be accepted if the law guar
anteed public utility corporations
fair return at all times. He de-
clared that the company had failed
by an amount larger than the ac-
crued depreciation to earn in past
years a fair return.
In recent years. Mr.. De Vane
said, it was necessary in one IN
stance to take money from surplus
because Of the company's failure 10
/ earn even operating expenses.
Major William f. r. Covell, AS
sistant Engineer Commissioner, then
interrupted TO inquire whether the
81 ,325, 900 paid to the company by
the United States Government due
J., ing the war didn't make up the
:, deficit.
:. Not Seeking Rate Raise.
. Mr. De Vane replied that the
. commission might consider the com
, pensation by the United States GOV
eminent as making up the deficit
{ | but strongly indicated the company
; did not agree with the commission
! | in this respect.
Mr.. De Vane took occasion today
| to declare the company was not
seeking higher rates.
II would be willing now" he said,
/ Ito have the commission enter an
order continuing the present rates
: for two years"
He left the company a loopho:e.
however, by declaring the present
| rates would be satisfactory for two
years unless i'm the interim some
thing unexpected or. extraordinary
happened.