Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-01-30
ELECTRICITY RATE
PACT FACES TEST
Agreement Which Has Work
ed Six Years May Be
Upset Here.
BY GEORGE E. DOYING.

Americas most interesting experiment
in peaceful regulation of electric rates.
which appropriately enough, has been
under way IN the Nations Capital, to-
day seems to be headed toward disaster
after working to the satisfaction of
all concerned for six years.
With a primary rate for electric
service among the lowest in the entire
country, if not in fact the lowest, and
this in a non-industrial, non-hydro-
electric tcrritory-with a rate that has
consistently and without controversy
besn reduced regularly every January
since 1924, until now 1t is but little
more than one-half of what it was in
l925-objectionS have been made and a
legal battle that ragged from 1917 to
1924 appears about to be renewed. All
this because the utility is accused of
making too much money.
Consent Decree"
The experiment b. gan when the
Public Utilities Commission of the Dis
trict of Columbia and the Potomac Elec-
trio Co. entered into compro-
mise in 1924 to end their legal warfare,
and the District Supr. me Court entered
a consent decree" This agreement
provided that at the end of each year
the net profits of the company in excess
of ~ per cent of the agreed valuation
$3.50 basis. one part being retained by
the company the other returned to its
customers in the form of a rate reduc-
ton for the ensuing year. That this
has proved a profitable agreement for
the company IS indicated. it is claimed,
by the fact that the amount so divided
has never been below $685. 900 and
usually has been well above LOCO, 900.
The present trouble seems to have
come about because the residents of
the District of Columbia increased their
use of electricity so much that even
after dividing the excess proflets in the
agreed manner. the utility has been
pocketing about 10 per cent on the
agreed valuation. So this month the
Public Utilities Commission, while &C
cepting the sixth annual reduction "for
an indefinite period" bringing the
primary rate down to Al cents per
kilowatt hour, announced at the same
time that the return to the company Is
| excessive.
Commission Proposal.
Largely on the basis of the recent de-
cision CT the Supreme Court of the
District of Columbia in the packers
case, which seems to have held that q
consent decree may be modified by the
court even though the parties to the
original agreement do not now agree
to a modification, the commission has
directed its counsel to apply for
change in the rate of return to be al
lowed the utility.
The commission proposes that instead
of ~ per cent the company shall re-
ceive but 634 per cent plus one-half Of
the excess profits, provided the excesH
does not exceed l per cent of the valu"
alton. If the excess should be between
/ and per cent the division would b,
on 1925 basis, the short end goini
to the company, and if it should eA
coed per cent the company would ge
but one-siXth.
A third group representing one Of tn
citizens organizations, with some sun
port from the District peoples counsA
and corporation counsel, wants to d.
card the entire consent decree" sylk
tenn and reopen the old valuation prN
ceeding. Their contention is that Ma
valuation of $32500,00 agreed upon I'D
1924, which, with additions for aIil
provementS, etc, forms the basis fca Jits
termining the earnings, is far too 1uvL
There is some possibility that this D by
be the outcome of the present s. a.
| ton, although it is expected the f, Rh-
mission and officials of the com Any
will make strenuous efforts to effect In
other compromise.
Copyright, 1879