Evening star., 1932-07-28
PEPCO LOSES SUIT
OVER RATEMAK|NC
Justice Luhring Unholds
Power of Utilities Commits
sion to Order New Scale.
Continued From First Page)

amount available for reduction in rates
under the commissions order Is ST.
082. .396, under the old consent decree
$505, ,061, and under the modification
ordered by the court, $eS7,7ol.
Difference Is Explained.
The explanation of the difference be-
tween the sliding scale ordered by the
commission and the modification Or
dered by the court, according to the
commissions statement, Is as follows:
"A modification of the sliding scale
fixed by the commission was made in
accordance with that recommended in
the commissions brief, so as to result
Ia the application of one-half the ex-
cess above per cent Of the rate base
when the return was between and
per cent, and additional amount of
three-quarters OF l per cent Of the eX-
cess above per cent when the return
was between 8 and per cent, and a
further additional amount of five
siXthS of the excess above per cent
when the return is above 9 per cent.
This should be compared to the COM
Missions sliding scale in order No. 9l9
of one-hAlf Of the total excess above Z
per cent when the return was between
7 and per cent, three quarters of the
total excess above 7 per cent when the
return was between and per cent
and five-sixths Of the total excess when
the return Is over 0 per cent"
Order to BE Entered.
An order will be entered in accord
ance with these findings, the court said.
The memorandum opinion reads:
This is an appeal by the plaintiff
from order 919 Of the Public Utilities
Commission of the District of Columbia
entered on the 9Th day Of June, 1881.
This order 9l9 modifies a sliding scale
arrangement promulgated by decree Of
this court on the 31st day OF Deem
Der. 1924, pursuant to the provisions of
paragraph ID of section 8 of the act
creating a Public Utilities Commission
THE latter was then before this
court on appeals from two orders of
the commission, one fixing a valuation
of the plaintiffs property, the other
establishing rates. Pending these ap-
peals, the commission and the plain
tiff agreed on a current valuation of the
latter's property in the amount OF S32,-
500, 900, including property in Mary
land and on sliding scale rate ad-
iustment under which one-hah the eX-
cess earnings on the agreed rate base
above 712 per cent thereof were to be
considered as equal to the amount
available for reduction in rates each
succeeding year. 1t was agreed that the
rate base should be increased by the net
cost of property added, that no depre-
ciation should be deducted therefrom,
that annual charges for depreciation
should be accrued at such rate as to
eventually approximate 20 per cent Of
the current rate base. There was pro-
vision under which rates were to be ad-
iusted upward If the return fell below
715 per cent for five consecutive years.
= per cent for three years, or 612 per
cent for IL months.
Right to Issue Questioned.
THE decree Of December 81, 1924,
embodied this agreement, and it is now
insisted by the plaintiff that the COM
mission was without Jurisdiction to issue
order s19 ard thus after the agree
ment. as the agreement was con-
tractual arrangement made before a
court of competent Jurisdiction for the
purpose of terminating suits then in
progress, and, further, that the court
alone can modify or revoke the sliding
scale in this consent decree, and that
the commission should have applied to
the court originally and sought the de-
sired modification"
Here Justice Luhring refers to the
action of Chief Justice Wheat, and sets
forth his own accord with the opinion
of the chief justice.
Continuing, the memorandum reads:
This court Is not required nor Is 1t
permitted to usurp the functions OF
the commission. AS was said by the
Supreme Court in Kellar VS.. Potomac
Electric Power Co, Congress contended
that the court shall revise the legis-
lative discretion of the commission by
considering the evidence and full rec
ord of the case and entering the order
it deems the commission ought to have
made.
Jurisdiction Is Upheld.
"I therefore find that the Public
Utilities Commission had jurisdiction
to issue order 9l9 and to alter or amend
the existing sliding scale arrangement
The plaintiff further contends that
the sliding scale in order 9l9 is un-
reasonable and confiscatory. 1t will
serve no useful purpose here TO review
the evidence on which this order is
based The plaintiff appeared and was
accorded fair hearing before the COM
mission. I have carefully considered
the evidence and full record Of the case
before the commission and am OF the
opinion that the yield under the sliding
scale proposed in order el9 Is reason
able and not confiScatory. However, 1t
was shown that the percentages used in
the said order were so devised as to re-
suit at certain particular intervals in
greater reduction relatively when a
larger sum was earned than If smaller
percentage of profit had been derived.
During the course of the argument
counsel for the commission stated that
such an overlapping method involved a
forecast of future conditions and on
brief there was recited on behalf of the
commission an adjustment of the sliding
scale in order No. 9l9, known as the
step-up method, under which no over
tapping condition occurred.
1T lies within the power Of this
court, after full review of the evidence
on appeal, to enter an order modifying
or appending that of the commission
In view of the great desirability of re-
tanning In enect the Sliding scale
method and of avoiding further delay
in accomplishing the reductions of
rates hereunder, am of the opinion
and so find that the commissions order
should be amended so as to read as
follows:
Adjustment Is Provided.
"4. If the rates hereafter yield more
than per cent in any 12-month period
on the rate base for that period, de-
termined as aforesaid, the excess over
and above the said 7 per cent shall be
used In a reduction of rates to be
charged the public for electric service
hereafter as follows: If the amount
earned Is above Z per cent and less
than 8 per cent of the rate base, rates
for the following II months based upon
the business done during the IL months
in which said excess occurred shall
be adjusted so that the gross receipts of