Evening star., 1927-10-31
Wilson Outlines Consolidation
Plan Before Public
Utilities Board.
PRESENT FAPE WOULD
CONTINUE FOR oNE1EAR
Rate Making to Be Based on
Earnings Rather Than Valu-
alton of Property.

for bringing about unification OF the
transportation systems of the District
were officially submitted to the Pubic
Utilities Commission today by its au-
thor and were Immediately made pub
lie for the first time.
The plan provides for consolida.
tion of the transit properties of the
CanitaI Traction, Washington Rail-
way & Electric and the Washington
Rand Transit Co.'S, and the creation
of a new company. chartered by act
of Congress.
The merger company would have
Capitalization of $52,700,000. of which
se.7o0.000 would be new capital, $l,-
200. 900 Of which would be used for
making track adjustments and rear
rangement of facilities. ETC.: 100000
for working capital and s1,0oo,ooo for
a fare adjustment fund.
Based on Earnings.
The Capitalization would be based,
as previously hinted, not on the re-
snective valuation of the transporta-
ton companies, but on their earnings
for a typical year.
Mr.. Wilson pointed out that he had
succeeded in inducing the owners OF
the street railway properties to accept
the earnings of the company rather
than the valuation as the basis for
rate-making purposes.
The merged company. under Mr.
Wilson's plan, would be privately
owred, but he proposes the appoint
ment by the District Commissioners
of a board of three trustees to man
age the utilities, regulate and nx the
rates of fare and to direct the re-
arrangement of the tracks. The sal
aries Of these. trustees he proposes
to charge against the operating ex-
penses Of the consolidated company.
Present Fares to Stand.
The plan also contemplates the con
tinuance OF the presen. rates or fare
for one year. after the date OIL con-
soi.dation. ssy~s s.~@~
Mr.. Wilson emphasized that the
plan he submitted to the commission
still lacked certain details as to the
features outlined in the documen.
submitted to the commission. ard he
reserved the right to make any
changes necessary before public
hearing is held by the commission to
consider his proposal.
The Potomac Electric Power Co.
would not be a party to the merger.
NJ. Wilson, pointing out that it is
separate corporation engaged IN uil-
ferent line of business.
The consolidated company under
Mr.. Wilson's plan would assume
funded debt of the existing companies
not in excess of 20.556, 900. Inciden-
tai to- the consolidation there would be
provided in cash new capital amount.
ing to s2,700 900, which would be used
to furnish the superior and more eco
nomical service.
Earnings Rate.Making Basis.
Mr.. Wilson said that ne proposes to
use the earnings of the railway com
panies for a typical year instead OF
the valuation as basis for rate-mak.
ing purposes, because he feels that the
valuation of these companies, which
ranges between $62, SOC, 900 and s65..
G00. 900. would impose higher charge
upon the street car and bus riders
than present conditions justify.
Under this plan the earnings OF the
companies before interest and depre'
citation, together with the saving in
operating costs which he claims will
result under a unified and readjusted
operation and more efficient service
estimated at about 81 .9g0, 900 year
and also immunity of the merged com
pany from the expense of paying the
salaries Of the crossing policemen and
the cost of street paving between the
tracks, would give the consolidated
company an earning of more than $3.
= 500. 900 a year.
Capitalized at the return of per
cent which the courts have held to
be fair rate base of $4,000 900
would be esta blished to which would
be added s2,70o.000 of new capital
making an aggregated rate base oi
$52,70o, 900 at the beginning of the
operation of the consolidated com
pany.
Annual Return Estimated.
On this basis Mr. Wilson has fig
ured the owners would be entitled
to an annual return of $36s3.000 &
year. This rate base is from $l2,.
100000 TO $15,000.D0o under that al.
ready established by the Districi
Court of Appeals in the Capital Trac.
ton Co. case and the probable results
of the Washington Railway and
Electric Co. case.
Mr.. Wilson's plan also contemplate.
having the Potomac Electric Powei
Co. enter into long-term contrac
with the consolidated railways com
pany To furnish it power on sucl
terms that the net cost would be sub
stantially less than the present az
gregate cost to the Capital Traction
and the Washington Railway Il Eiec
tric Cos.
The board Of trustees proposed b,
Mr.. Wilson to manage the consolidat
ed company would have conferre'
upon il ample powers Of supervision
regulation and direction TO assure
service and provide extensions, better
rnents and improvements as may b
required in the public interest.
The trustees acting for the Dis
trict, having as indicated supervision
over costs of operation, although ieas
ing the actual operation in the hand
of the corporation he said "wouI
be empowered to periodically adjus
fares so as 10 pay actual operatin
costs plus the return to the owner
of the properties. the return TO III
pwners to be utilized by them in pay
ng interest on funded debt and div
Hends.
Adjustment OF Rates.
"For use I'm such periodical adjns
ments of rates of fare as may occur
fare adjustment fund of $1,000
Eontinued on Page S. Column 81