The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1925-04-02
The Telephone Case---What Is
a Fair Return on Valuation?
By BILL PRICE.

+. indicate that the Public Utilities Commission
win cut the $260OO0O valuation claims OF the chesapeake
and Potomac Telephone Company to about winch
it is fully justified in doing the light OF the facts that
have been brought out.
Having fixed It's own estimate Of valuation Of the telephone
companys properties in the District the Utilities Commission
viii determine whether it viii order reduction in telephone
charges.
Better than anything Jet coming from the commission Is
the statement that in the telephone companys case the
commission Is considering per cent return upon valuation
II necessary company went to the courts IN mary
land 20 fight the attempt Of the Maryland pubic service
commission TO reduce rates in that State While the outcome
az the Ieea battle was to small increase IN rates
the Maryland Judge decided that per cent e fair return
on public utilities valuations and that there no con1sca
zion 81 properly so long as this return is allowed.
It Is most satisfactory that this ruling OF the Maryland
Pubic utilities Commission Of the District in handling vaua
ton and rate The commission cannot pc accused ~
District public u; q aR noo sns% Of the for
years have liberal TO all local utilities as 20 enable
70 70 dss iaF rss Ss BEEN .
liberal the stocks and bonds Of every local u are 70
day quoted at high prices the local stock exchange and are
IN demand by investors and SPECTATORS.
In the agreement reached between the commission and the
Potomac Electric Light Company felt that the commission
had been exceptionally generous In allowing IA per cent
return upon valuation Of that company fixed in the
ment AZ that time suggested that somewhat dangerous
precedent had been in permitting TIA per cent return
which We believed to be excessive. 81
The commission may haye believed Il necessary, however
IN order settle the longstandng dispute electric
LIGHTING valuations and rates in the District. The public
benefited thereby In many ways
The IA cent then allowed does not Of course bind the
Commission grant that return IN the future e Is in
position to pass upon each situation It deems fair and
Just and the probability Is that 7 per cent returns IN the
District win allowed hereafter And they should not
be- with inflated valuations claimed by all utilities
Germs their properties there Is to be initiation in
valuation due present high prices then the return should
not be tod high The time win when there viii be
deation Ii valuation and the utilities companies VIII howl
for higher returns keep them going Then may be the
time for IA per cent returns.
With the steady In finances throughout this
country since the world war; securities Of all kinds in such
demand that gilt edged per cent stocks sell above and
gdged per cent bonds command prices far above par
per return recognized throughout the United
States exceptionally attractive.
The per cent bonds Of the Chesapeake Potomac Tele
phone Company today sell in the local market ct virtually
The stocks and bonds Of every Washington public utility no
matter what interest rate they bear commanding fancy
prices these utilities allowed per cent return in the
District valuations that include the high prices Of this time
they getting all that they should expect
should be remembered that the policies Of the Public
Utilities Commission virtually GUARANTEE that the public
shall pay sufficient fares telephone electric light
rates viii absolutely give the companies return at
whatever figure fixed TO all intents and purposes the
utilities companies do get guarantee because they know that
their returns do not up to the commissions orders
they win be allowed increased rates fares that will make
the return.
The just way to meet excessive valuation claims is by
turn rates not exceeding per cent The commission has
useful weapon in its hands in this matter and should
hesitate to it in fairness to the public which foos the
bills.