Evening star., 1932-09-16
Decision, Effective Septem-
ber 80, includes All but Prl.
vate Branch Service.
COMPANY is EXPECTED
TO APPEAL TO COURTS
Reasonable Earnings Held Possible
Under Observation-Disclosures
Figure Set at $2a, 400, 900.
The Public Utilities Commission today

The Public Utilities Commission TO-DAY
ordered a 10 per cent cut in all tele.
phone bills in the District, for service
to be furnished after September 30, ex.
cept for private branch exchange service
where switchboard is supplied to SUBJ
scribers. Apartment houses, business
concerns and others, where more than
one telephone line is in use, are usually
equipped with these private branch ex-
changes. The rate reduction does not
apply to them, but only to persons with
private telephones.
The cut was ordered by the commits
sion as result Of extended public hear
ings which started June Is. Although
the Chesapeake & Potomac Telephone
Co. withheld comment pending a study
OF the order, 1t is believed certain the
company VIII appeal to the courts to
restrain the order.
$z9,4oo,oo0 Valuation.
The commission found<the rate base
on which the company is entitled to
earn q reasonable return cannot be
6ACoSCl b1AdA 2<otIOO,OOU IlldG I'LL
der present conditions a rate of per
cent Is reasonable. The commission
found further that the company's net
revenue for the current calendar year
based on the rates ordered, will be not
less than $1,800,000, and for the IL
months ending June 80, 1888, not less
than 81 900, 900.
It found these prospective earnings
under the rates will return to the
company not less than per cent upon
its rate base, will allow the company
to pay all Of its fixed charges, to pay
dividends Of not less than Sc per share
on all outstanding stock and to carry
a balance to surplus All these trans
missions opinion, without the neces-
sity Of discharging or reducing wages
Of any employe.
The value figure found by the COM
mission Is about $7,000,0 900 less than
that claimed by the company. With its
order, the commission issued a lengthy
resume of all evidence submitted and
arrived at the conclusion that the $29,-
100000 fixed is generous.
Declared Reasonable.
One Of the main points of contention
was claim by the company Of $4,000
600 as representing going concern
value" On this head the commission
stated that it has included an amount
which it believes will be just and rea-
sonable" without stating what the
amount Is.
The commission finds an investment
cost of the entire property Of $32,-
100000.
Part Of the long opinion Of the COM
mission is a finding that the Ia per
cent of certain items of telephone
operating revenue paid by the local
company to its parent, the American
Telephone & Telegraph Co., under q
license and service contract, should be
charged so per cent to operating ex-
penses and 40 per cent to fixed capital.
Accrual Need $1oo,o0o
In the matter Of accruing reserves
for pensions and retirement pay, the
commission questioned whether the &C
crual at the rate for 1881 ($l80,86D Is
amount be decreased and that the an
nual accrual need not be more than
100000.
The opinion also concluded that the
company's accruals for depreciation are
UOO great IL pOALlC0 OoS SAAoS eAiS SA
istence of an excessive retirement re-
serve tends to promote the retirement
Of property before its useful life ha;
been exhausted and the substitution OF
more costly property Of later design
thus adding further to the fixed capita.
which places additional barriers IN the
path of reduced telephone rates.
The opinion pointed out that since
1920, the company has transferred ap-
proximately $3,5l0,396 to surplus at the
average OF $292, 900 per year, and that
the highest amount SO transferred was
$685., 500 in 1881. Speaking OF this sur
plus, the Commission said 1t would bt
no hardship If, for time at least, ma
terially lesser amounts were available
for this surplus.