Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-03-18
Rates for Electricity.

The utilities interests viii doubtless
interpret the motives of the Public IT'LL
tiles Commission, in seeking further
reduction of electric rates in Washing
ton, as an effort to curb the Potomac
Electric Power Connpany's earnings, not
because the rates to consumers are too
high, but because the net returns OF
the company are extraordinarily high.
There will thus be injected the ques-
ton whether the purpose of public
regulation of utilities is to give the con-
sumers low rates and good service. or
whether it is to prevent a concern, such
as the Potomac Electric Power Com
pany. from making more money than
the courts generally have held 10 consti-
tute adequate return on investment.
That slant on the Public Utilities
Commissions fight to reduce electric
rates is due to the unique situation pre-
vailing in Washington. The city enjoys
relatively low rates. The list of Other
cities" compiled by the power COM
pany shows the favored position in
electric rates held by the people of
washington. And the consent decree,
under which electric rates have been
annually reduced since its adoption in
1924, has been pointed to with pride
by public utility interests far and wide
as an instrument that has prevented
fussy litigation over rates, which has
brought about lower rates to consumers
and has permitted the company to
reap the rewards of increasing business
and efficient management.
But the soundness CT the position as
sumed by the Public Utilities Commits
sion should be judged by considering
another factor. A protected monopoly,
such as the Potomac Electric Power
Company, supplying an essential COM
modify, is assured an adequate return,
no matter how high the rates that are
charged consumers. If business should
fall of, If the consumption of electricity
should decline, the rates would be raised
in order to permit the company to earn
an adequate return on its investment.
It is certainly true that if the con-
sumers are forced to pay high rates in
one case in order to guarantee the
power company an adequate return
when business is bad, the consumers
should be given all the benefits that
attend good business which has en-
ahled the power company to earn
return adjudged by the commission as
being excessive"
The question in this case is not
whether the consumers have enjoyed
some Of these benefits. They have. The
question is whether they have received
their full share of the benefits. 1t is
not whether rates in Washington are
low, which they are But whether they
are as low as they could be, permitting
the company at the same time to make
q fair and adequate profit. Nor is the
question whether the consent decree
should be abandoned. 1t is whether the
consent decree should be modified in a
way that would take into consideration
the fact that instead Of guaranteeing
the company a return of III per cent
on an agreed valuation. which at the
time was considered fair and adequate,
it has permitted the company to realize
about 10 per cent. The reduction in
light rates under the consent decree
has been beyond the expectations of
those who agreed to it. But SO have
the earnings of the company. If rates
can be reduced still further, at the
same time assuring the company a
return in excess of the stipulated 7ia
per cent, they should be reduced.
The Public Utilities Commission has
offered the electric light company the
che Of several methods by which
~ ! reductions can be agreed to vol
UNFAIRLY. It is TO be hopsd that the
company will agree and that modi-
fed consent decree will take the place
Of the one under which both company
and consumers have benefited, increas-
ing the benefit TO consumers without
unduly diminishing the benefits to the
power company
i L..