Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-12-30
CHARGES DIVERSION
OF PEPCO PROFITS
Clayton Causes Turmoil at
Hearing to Decide 1881
Electric Rates.

An assertion by William NICK. Clay
ton, of the Federation of Citizens AS
SociationS, that for more than is years
profits which should have been credited
to the Potomac Electric Power Co. had
in fact been credited to its parent con-
Germ, the Washington Railway & Elec-
trio Co., threw into turmoil today the
peaceful course of the public hear
ing on the 1881 electric rates before
the Public Utilities Commission.
The first surprise came when Mr..
Clayton called as his witness Byars
NICK. Bachman, chief accountant of
the Public Utilities Commission, and de-
veloped the fact that the railway and
power companies produce power at the
Benning power plant under an arrange
ment which permits the railway COM
pany to sell part of the power pro-
duced by it at profit.
Power Counsel Objects.
S. Russell Bowen, counsel for the
power company, objected to every sylla-
BILE OF testimony along this line, but
most OF his objections were overruled.
When Mr.. Clayton began a series of
questions as to an order issued by the
commission in 1915 to the effect that
the profits from these sales should be
credited to the power company and not
to the railway company, Mr.. Bowen's
objections were redoubled in energy, and
William F. Ham, president of both COM
pantes, who up to that moment had
sat silently by, broke in and demanded
that II there was such an order the wit
ness should produce it.
Mr.. Bachman calmly produced
document dated September 2, 1915, in
which it was recorded as the opinion
of the commission that the profits
should be credited to the power com
pany and copy Of the opinion ordered
served upon both companies. It was
not, however, definitely ordered that
the credit should be made. Mr. Bowen
redoubled his objections, but the COM
mission ruled that it was compelled
to take judicial notice of the opinion
or order, and at that point the hearing
adjourned.
There was no intimation as to the
difference in dollars that these credits
would have accomplished, but If the
amount is large and the commission
should decide it should be credited to
the power company, it would mean
that the power company's revenues
would be larger by that amount and
the prospective slash in rates proper
tionately increased.
John M. Nicholson, research assistant
to the peoples counsel, was first called
to the stand and introduced 10 exhibits
built up upon figures in the records of
the Public Utilities Commission and also
upon estimates of earnings made by the
power company. According to these
exhibits, the effect of the company'S
no RI
it profits in excess of 81 ,600,000 in 1881,
representing a return of 1912 per cent
upon a conservatively estimated valua-
ton.
Want Lower Yield.
The theory of the reduction is that
it should bring the rates down to the
point where they will yield III per cent.
Mr.. Keech is contending that the re-
duction offered by the company not only
will fail to effect a reduction in 1881,
but will result in an increase in the
company's profits.
This increase, as shown in the eX-
hibitS, will come about as the result of
many factors, including the normal
yearly increase of consumption with
the corresponding decrease in unit pro-
duction, enhanced efficiency of cleo
trical production machinery and equip
ment and declining prices of such staple
commodities used in the electrical in
dustry, as coal and oil.
At the start, Mr.. Bowen moved to
dismiss the proceeding on the ground
that it was prematurely fled that notice
of it was insufficient and Irregular and
| for numerous other reasons.
Motion Is Overruled.
He declined to argue the motion, and
| it was overruled by the commission.
! Then Mr. Keech read his opening state
ment quoting from decisions of the Su-
preme Court of the United States to the
| effect that public utility is entitled to
earn a return similar to that enjoyed
| by other well established businesses, but
| that 1t had no constitutional right to
| large profits such as sometimes attend
purely speculative enterprises. The
, power company, with a $12 900 cor
| porate surplus and monopoly on cleo
] trical supply in this territory, was surely
| not entitled to as high as its present
rate of 10 per cent return, Mr.. Keech
| claimed
| Next addressing himself to the con-
sent decree of Equity Court under which
the rates are annually adjusted, he re-
marked:
I'VE must not permit the fact to
escape our minds that the approval of
the agreement reached some six years
ago between the company and the COM
mission by the court was made in the
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