Evening star., 1931-05-24
RATES ROW
WILL Be REOPENED
At PUBLIC HEARING
Sliding Scale Dispute Slated
to Be Aired Tomorrow
Before Commission.
HIGH RETURNS ARE BASIS
OF COMPLAINT BY D. C.
National Attention Centered Here
on Contest Over Profits Of
Public Utility.

The dispute between the Public Utili-
ties Commission and the Potomac
Electric Power Co. over the rates paid
by Washingtonians for electricity will
move into another stage tomorrow at
an open hearing before the commission
to discuss the sliding scale under which
the rates now are set and other re-
lated matters.
This dispute has been dragging along
now for nearly five months. with no
apparent results. The commission be-
lieVcs that under the present system
too much Of the corporations profits
go to the stockholders and not enough
to the public by way Of reduced rates.
The company believes the present sys-
TENS fair.
National attention has been centered
on the contest. 1t has been discussed
in articles in the Public Utilities Fort
nightly. a magazine of national circula-
ton, and also in articles appearing in
the Wall Street Journal under the sig
nature of Thomas F. Woodlock, a for
mer member Of the Interstate Com
merce Commission.
System Is Compromise.
The present system was born six
years ago. A decree, signed by former
Justice Wendell P. Stafford of the Dis
trict Supreme Court, put it into opera
ton Its basis is a compromise on val
uation reached after years of litigation
between the commission and the cor
poration, which wandered inconclusively
up to the Supreme Court of the United
States and back again TO the District
Supreme Court.
On this valuation, which at the start
was $32 500 900. the arrangement is that
rates shall be adjusted so as to yield
the company a return Of ~ per cent.
Should the return exceed this figure
then the excess is divided in half, and
the resultant figure is used as a fund
for reduction of the rates the next year.
Each year the valuation is brought up
to date by adding to the original figure
the cost of net additions TO the prop
erty weighted, but undepreciated.
The phrase weighted" simply means
that if a piece of property is put in
service half way through the year, for
instance, only half of is cost is added
to the valuation figure.
Profit Around 10 Per Cent.
The corporation keeps all the excess
earnings, but rates are calculated in
an effort to bring the return down to
7l2 per cent. Thus far, all OF the
calculations have gone awry. Not only
has the return never been brought back
to 712 per cent, but in spite of annual
reductions, which have brought the rate
from 10 cents in 1924 down TO AZ cents
today (primary rate per kilowatt- hour,
the companys return has consistently
stood at about 10 per cent.
Peoples Counsel Richmond B. Keech,
at the time the rate last was fixed,
tried to get the commission to estimate
the electrical consumption for the year
during which the new rate would be
effective, instead of basing it on the
past years consumption, as had always
been done heretofore. The curve of
consumption is steadily upward, one of
the principal reasons for the continual
high return. But the commission would
not follow his advice. 1t found as a
fact that the company's return was too
high, but proposed to change this state
of affairs by introducing a different
sliding scale. Under the commissions
proposal, the reduction fund would be
one-half of the excess earnings over
634 per cent; three-quarters of the ex-
cess over 734 per cent and five-sixths
OF the excess over 834 per cent.
Sliding Scale Refused.
The commission tried to get the COM
pany TO Cooperate with it in AN effort
to substitute the new sliding scale but
the company refused. The commission
and its own legal adviser, Corporation
Counsel William w. Bride, were in dis
agreement as to what to do next, Mr..
Bride recommending abrogation of the
consent decree and the commission de-
string to go to court with a petition to
modify it. Mr.. Keech is a strong ad-
herent Of the former view At the COM
missions direction, Mr. Bride prepared
the petition for modification. but this
has been pigeonholed, and apparently
never will be filed in court.
What will be the outcome Of the
hearing tomorrow, outside of bitter
legal argument between S. Russell
Bowen, for the corporation, and Will
liam A. Roberts, for the commission, is
difficult to predict. The commission has
some exhibits to present. presumably
statistics of the corporations recent
earnings. II is not believed that the
corporation will offer any. Chairman
Mason M. Patrick of the commission
said that he did not expect the hear
ing to last more than one year.