Evening star., 1925-03-20
HUGE c. & P. FUND
MAY Be DEDUCTED
Utilities Body Considers Cut
ting Depreciation Total
in Rate Fixing.

That the Public Utilities Commits
sion is seriously considering deduct
ing from the reproduction value of
the Chesapeake and Potomac Tele-
phone Company the amount the COM
pany has accrued for depreciation was
indicated at the valuation hearing to-
day
Col Bell, chairman of the commits
sion, asked the direct question Of
Dozier Devane, attorney for the COM
pany,. If he contends accrued depre-
ciatioh should not be deducted from
reproduction value of the property.
NJ Devane replied that to take the
amount accrued for depreciation as
a measure OF the depreciation exist
ing in the property would be an error
of law. 1t might be, he said, that the
amount in the reserve and the actual
depreciation OF the property would be
the same at some time.
$4,000. 900 Accrued.
The testimony presented in the
present valuation proceeding shows
that the company has accrued depreci-
alton amounting to approximately
81, 800, 900. OF this sum, however
about s9ss,000 was given the local
company by the American Telephone
and Telegraph Co. as part compensa-
ton for large expenditures the local
company had to make to cope with
war conditions in Washington.
Deducting' this gift, the local COM
pany's accrued depreciation is, ir
round numbers, s3,5oo,o 900 In esti-
I 1t,,n ~f+ falc
phone property at s25, 100000 engi'
neers OF the company testified the
actual physical depreciation OF th'
property is only s1.s00,000.
I'VE admit" said Mr.. Devane, thai
we have accrued depreciation OF
s3,5oo,0o0 and that the depreciation
represented by an inspection of the
property is only about $4,000. 900.
The smaller figure, he explained, Is
the depreciation in the physical prop
erty. The other figure represents the
efforts of the company to accumulate
the value of the property that is to be
retired.
Sees Double Payment.
Col. Bell explained that his point is
that IL the company sets aside money
for depreciation and then reinvests
that money in the property without
deducting it from the valuation thai
the rate payers would be paying Z
return on it twice.
To this contention Mr.. Devane re-
piled by declaring that the company
has failed to earn a fair return or
its property by an amount larger thar
! the sum which has been contributed
to the depreciation reserve. In sub
stance his argument was that in
stead of taking the return to which
it felt entitled the company had bull
up the depreciation reserve.
Plans No Increase Request.
Mr.. Devane took occasion again to-
day to declare that while the COM
pany is contending its valuation
should be increased from approx
mately $4,000, 900 to SIS, 100000, it has
no intention of seeking an increase ir
telephone rates. He said the company
would be willing to have present
rates declared effective for two more
years and would not seek an increase
in that time unless unforeseen condi-
tions should arise.
Mai. Covell, assistant to Col. Bell
had the company submit evidence to-
day as to the value of three pieces
of property owned by the company
but not yet built upon. This line ot
inquiry indicated the commission is
considering disallowing the value OF
this vacant land in fixing the present
valuation.
Byers Nick. Bachman, accountant
for the commission, will testify later
| in the day as to certain valuation
studies he has made.