Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-04-15
FLEHARTySTARTS
TELEPHONE RATE
REDUCTION STUDY
Peoples Counsel Asks for
Record of Company's Earn
ings Since 1927.
PRESENT AGREEMENT
TERMINATES ON JUNE |
Belief Is Expressed Returns Over
Two-Year Period Will Not
Exceed z Per Cent.

An exhaustive study of operations Of
the Chesapeake & Potomac Telephone
Co. for the last two years was under
taken today by Ralph B. Fleherty
peoples counsel before the Public Utili-
ties Commission, to determine whether
there is justification for a reduction in
present telephone rates.
Existing rates were established under
q compromise agreement between the
commission and the company in May
1927, and cannot be disturbed before
June /, but Mr. Fleharty wants to be
in position then to initiate move Tor
q revision downward if company earn
ingS over the two-year period warrant
Mr.. Fleharty's first step was to ask
the accounting Office of the commission
to furnish him with data for use In
his study. His request for Information
covered every phase of the company S
financial condition.
IT have asked the commissions ac-
countantS for q. complete statement OF
the telephone company's operations for
the period since the last revision in
rates" he said. This will include the
rate of return it has earned and the
present valuation based on the COM
missions old, valuation brought up to
date by additions and betterments A
study of this data will show whether
q reduction is justified under present
conditions"
Earnings Believed Fair.
Although it will be several days be-
fore the complete statement of the tele-
phone company's financial condition is
submitted, commission attaches, who
have followed fairly closely the earnings
of the company as shown by its month
IL financial report, do not believe the
rate of return over the entire period
has exceeded per cent, which the
commission heretofore has considered
fair and reasonable. Fleharty probably
would not urge the reopening of the
rate case in such an event. as he like
wise is inclined to regard 2 per cent
return as reasonable for a public utility
corporation which is giving efncient
and satisfactory service.
The present rates were hxed May Is,
1927, when the company offered to
compromise a rate case 1t had been
fighting In the courts for two years.
Coupled with the reduction, the COM
pany agreed to make certain refunds
to its subscribers and withdraw its case
from the District Supreme Court with
out having the valuation nxed by the
court. The commission accepted the
offer with a feeling that the company
after two years of fighting. finally &C
cepted the commissions principles OF
valuation as correct.
Case. Remains Dormant.
The reduction brought the rate for
unlimited service down from SIS to $4.75
a month. and increased the number OF
messages on two-party lines from 50 to
40 a month. These rates under the
agreement, are to remain in force until
June l, land thereafter until changed
or modified"
The valuation case under the agree
ment also is to remain dormant until
the commission makes a move to re-
wise the rates and public utility experts
are inclined to believe that should steps
be taken to reduce the present rates,
the company would counter with
demand for q revaluation. which would
forestall any change pending its COM
pletion.