Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-04-09
ADMISSION OF HIGH
GAS RATE IS TOLD
Statement Credited to Wood
at Arlington Hearing
in Richmond.
Special Dispatch to The star.

Public Utilities Commission of Airing
ton County, yesterday testified before
the State Corporation Commission that
G. A. G. Wood. president Of the Wash
ington Gas Light Co., had admitted to
him that the company could charge a
wholesale rate of SO cents per thousand
cubic feet for gas sold to the RoSslyn
Gas Co. and still' earn a reasonable
profit. but that the Public Utilities
Commission of the District of Columbia
had fixed a wholesale rate of so cents
and the company had to abide by 1t.
Counsel for the Washington Gas
Light Co. was today preparing to COM
bat this statement when hearings on
the application Of the Arlington COM
mission are resumed here tomorrow
morning.
Excessive Profits Alleged.
The gas company is also expected to
center its attention on statement Dy
the witness to the effect that the Ross
lyn Co., according to its 1929 report.
earned 155 per cent on return OF
what he considered a fair value of the
Rosslyn plant. This, Kephart declared,
represented excess earnings OF $685.
455.16, or approximately 80 cents per
1000 cubic feet in excess OF what 1t
was entitled to earn.
Presentation of testimony by the
county was completed yesterday, and
at the request of counsel for the WASH
1nGton Gas Light Co., resumption OF
the case was continued until 1l:SO
o'clock tomorrow.
Kephart, as the principal witness Tor
Che county. attempted to show that
based on the amount of gas purchased
by Arlington consumers, S.13 per cent
of the total value of the Georgetown
plant was allocable to the Arlington
County supply. Upon this figure rests
he declared, the rate base upon which
a fair return to the Washington COM
pany can be based. The companys
cost of gas production being $50 cents
per 1000 cubic feet, according TO It's
last annual report, he said it was COM
puted that a fair and reasonable whole
sale rate to be charged the RoSslyn
company would be 48.2 cents, when
operating expenses 6 nd fair return on
the value of the Georgetown plant al
locable to the Arlington County supply
were taken into consideration.
Values Are Cited.
The value of the Rosslyn plant for
rate-making purposes Kephart eStl-
mated to be $4,000. The cost
of distributing gas to Arlington Coun-
ty consumers was estimated to be
sos cents, while a fair return on the
rate base of $4,000 was computed to
be 1913 cents. With the reasonable
wholesale price Of gas estimated to be
49,, the witness pointed out that
the total of these three items would
be $1181, or nearly the $1.2o that he
thinks would be a fair price for gas
20 the consumer.
At the outset, Wilton ]. Lambert, chief
counsel for the Washington company.
commended that the Virginia authorities
had no authority to inquire into rates
In the District of Columbia. In reply
To- this, G. o. Eastman, special rate
attorney for the county, argued that II
q contract between two corporations
with the same interests involves
third party, which in the case at issue
represented the people OF Arlington
County. the Virginia Corporation Com
mission was clothed with ample au-
thority to inquire into the reasonable
ness of the contract
In commenting upon this question
after the commission adjourned the
hearing over until tomorrow, John @.
Gall, counsel for the Arlington County
Civic Federation, made the following
statement:
There Is no necessity for confusion
as to the issue before the commission.
No one acquainted with the legal
aspects of this case can sincerely
question the power Of the common
wealth of Virginia to determine the
rates to be charged its residents for gas
supplied by the RoSslyn Co. and its
afhliates. The Supreme Court OF the
United States has decided so clearly
that he who runs may read that until
Congress acts under its superior au-
thority by regulating the subject matter
for itself a State may regulate rates
for gas transmitted from the source OF
supply outside the State to local con-
sumers within the State.
1T necessarily follows that the State
may disregard any distractions, arti-
fetal or otherwise. interpoSed between
the points Of production and consump-
ton for the purpose of enhancing the
ultimate price of the commodity. If
any other rule were adopted, we should
have the absurd result that although
rate regulation is legally possible, 1t
may In fact be frustrated by the act Of
the utility company itself.
Declared . Deal"
ait Is idle to discuss the so-called
contract in effect between the parent
company and its subsidiary. What ex-
4sts is not contract. but rather an ar
rangement' or deal A contract pre-
Bupposes the existence Of two or more
distinct parties. But for all practical
purposes the parent and its subsidiary
the Rosslyn Gas Co., are one. And no
proposition is better settled In law than
that no one can enter INFO contract
with himself
ut is no legal innovation to disre-
gard the corporate fiction and view this
situation In substance rather than mere
form. The Supreme Court Of the United
States. and all Of the State courts which
have been called upon TO do so have
consistently declared that the legal fic-
ton of distinct corporate existence may
be disregarded in case where cor
poration is so organized and controlled
and its affairs are so conducted as tc
make it merely an fundamentally OF
adjunct of another corporation
I'm view Of these considerations, the
power of the commission Is clear ThS
only issue before it is whether the ulti.
mate rates TO the consumer are just anc
reasonable"
Mr.. Gall and william G. Cloth
Commemorative attorney of Arlington
are appearing with Basham as lega
representatives Of the Public Utilitiei
Commission in the case.
Members of the County Board o
Supervisors attended the hearing yes
terday State Senator Frank L. Bal
of Arlington Is associated with Mr.. Lam
bert as counsel for the defendant com
pany In the proceedings