Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-02-15
Conference Between Utilities
Body and Pepco. Will
Begin Tomorrow.
WOULD AVERT RESORT
TO COURTS IN DISPUTE
Disposition Of Excess Earnings
Issue Before Officials and Power
Representatives.

Oficials of the Potomac Electric
Power Co. and of the Public Utilities
Commission will gather in conference
in the Offices of the commission at 10
o'clock tomorrow to talk over a COM
promise of the commissions threatened
court action to reduce Washington &
electric rates.
For six years the rates have been set
by following the dictates in a decree
signed by Justice Wendell Phillips Stat
ford of Equity Court, a decree which
ended six years Of litigation between the
commission and the company over the
commissions orders to the company to
reduce its rates.
According to the decree a compromise
valuation Of $32 100000 was set on the
properties of the company. The com-
pany was to be allowed to earn ia
per cent on this valuation. If 1t earned
more during any one year, then its
rates for the following year were to be
reduced so as to take up one-half Of
the excess.
Yearly Gains in Valuation.
Each year the company was allowed
to add to its valuation the weighted
value of all net additions to its prop
erty. Thus II piece Of new equipment
was installed for six months of the
year one-half of the value of the new
equipment would be added to the $32,-
100000 figure. The value of all plant
discarded was 10 be subtracted. The
$50, 500, 900 figure was a compromise be-
tween the $40, 100000 valuation claimed
by the company and the $25,000@
claimed by the commission. No allow
ance for depreciation was made in this
figure.
The theory behind the arrange
ment is that excessive earnings by
the company are to be corrected by
rate reductions, but that the company
is to be encouraged to good manage
ment and economical operation by al
lowing 1t to keep all Of the excess it
earned.
The effect Of working under the de-
cree is that rates in those six years
have been reduced from 10 to 40 cents
per kilowatt hour. but at the same time
the earnings Of the company have al
ways been in the close neighborhood Of
10 per cent upon the agreed valuation
plus net weighted additions.
Open Hearings Won.
The arrangement was first questioned
in the latter part of 1880 by William
NICK. Clayton, who forced the Public
Utilities Commission to held open hear
ings on the rate fixing for 1881, for
the first time since the decree became
effective. As result of testimony pre-
sented by Mr.. Clayton and People s
Counsel Richmond B. Keech, the COM
mission found as a fact that the con-
sent decree arrangement had worked
so as to yield the corporation an excess
sive return. It announced its intention
Of Immediately going to court to secure
modification Of the decree which
would effect q cut in this return.
Over this policy, the commission and
its legal adviser, Corporation Counsel
William w. Bride, came into sharp con-
flict. Mr.. Bride contended that al
though the rate making was adjusted
under the DECREE, that instrument was
not binding on the commission, and that
IL it found that the decree had re-
suited in excessive earnings to the
company, it had the power, and should
set rates which would not yield an ex-
cessive return. regardless Of the decree.
Such a course would abrogate the
decree, instead OF modifying it. Never
theless the commission decided to stick
to its announced intention of seeking
modification, and announced the terms
of the desired modification. The COM
mission wanted to use as a reduction
fund one-half of the earnings above
ga per cent Cnstead of III per cent?
II the earnings exceeded 73z, then the
commission wanted y of the evcess used
as the reduction fund. If they exceeded
83z, then they wanted So Of the excess
used as the reduction fund.
Petition Prepared.
Mr.. Bride yielded, and prepared q
petition embodying the suggestions Of
the commission, with an amendment
suggested later to the effect that If the
court could not see its way to granting
the commission the modification sought
then it should return jurisdiction Of
the case to the commission.
This petition has never been pre-
scented to court. Mr.. Bride, after pre-
pairing it, suggested to the commission
that it allow him to invite the cor
poration officials into a conference, to
see If the matter could not be settled
without resort to court. The commits
sion agreed. Peoples Counsel Keech
and the corporation officials accepted
invitations to the parley. Tomorrow
the meeting will be on.
Neither side has stated what it VIII
accept in the way of a compromise.
Mr.. Keech Is hopeful that it will result