Evening star. [volume] (Washington, D.C.) 1854-1972, 1933-03-09
Jurisdiction Over Deprecia-
ton Charges of Interstate
Concerns May Be Settled.
HEARING Is EXPECTED
LATER THIS MONTH
Matter Involved in D. c. Supreme
Court Case Of Telephone Com
pany Against Commission.

The District Public Utilities Commits
sion soon will ask the Interstate Com
merce Commission to establish for
mally and clearly the authority Of the
local body over the local aspects of de-
probation charges Of interstate firms
doing business here.
This Is q move of importance to the
customers Of the utility firms and the
companies themselves, since deprecia-
ton reserves are created out of charges
against operating costs Of the utilities
and therefore have an influence on rates
charged the public for services
The move Of the local commission
will come in a hearing on telephone
accounting procedure which is to be
opened, probably late this month, before
the Interstate Commerce Commission.
The date for the hearing has not been
set
In announcing today the local COM
mission would participate in the hear
ing, Maj. Gen. Mason NJ Patrick, chair
man, said the local body would be rep
resented by Riley E. Elgen, vice chair
man.
In its move for a clear definition of
its authority In this matter, the local
commission is expected to be joined by
spokesmen for number Of State COM
missions, all seeking the same objective.
Question Of Jurisdiction.
The local utility commissioners re-
gard the matter as one of great i'm
portance. since in valuation and rate
cases utility concerns engaged in inter-
state as well as local business have
claimed the local commission has no
jurisdiction over depreciation rules.
They contend only the Interstate Com
merce Commission rules apply.
This matter now IS involved in the
case now pending in the District Su-
preme Court in the litigation brought
by the Chesapeake g. Potomac Tele-
phone Co. against the commission in
opposing the order of the commission
last September, calling for 10 per cent
discount IN rates for domestic consum-
ers.
The point has been raised numerous
times during the history Of the local
commission.
Members Of the present commission
contend that Congress has given it au-
thority over depreciation charges as ap-
piled locally. The act of Congress Gre
ating the commission states in this con-
nection: The commission shall also
prescribe rules, regulations and forms of
accounts regarding such depreciation
which the public utility is required to
carry into effect
The issue was raised definitely in the
order Of the commission in the tele-
phone company case. this directing that
the Chesapeake & Potomac Telephone
Co. credit to its depreciation reserve at
the end Of each month a sum equal to
interest at the rate Of per cent per
year upon the amount of the deprecia-
ton reserve carried In its accounts.
Fund Invested in Plant.
The reason for requiring this interest
to be credited to the depreciation re-
serve was that the depreciation fund
itself was invested In the plant of the
Telephone company. The commission
held that the company had earned a
return OF no less than per cent in any
recent year on its depreciation reserve
available for investment in plant. The
depreciation fund, of course, Is created
out OF the revenues from the company's
customers.
In the same order the commission
directed that the amount accruinp
monthly for the depreciation reserve
should be diminished by the amounts of
the sums added to the reserve by rea-
son OF the interest charges it directed
be credited to the fund.
The commission reported In the tele-
phone case that from 1920 through 1881
the subscribers Of the telephone COM
pany had contributed $12,028, ITO to the
depreciation reserve for use In retir-
ing properties. A further study showed
however, the commission added, that
less than half Of this reserve was actu-
ally used for retiring outworn utilities.
there being balance in the fund as of
December 81, 1881, totaling s6,76l 900.
This, the commission held, was suf-
flcient to provide for retirements for the
next 10 years. on the basis Of the
experience Of the last IL years. on
the same basis, 1t was estimated the
balance In the depreciation reserve un-
used would mount to more than sI2. :
100000 at the end Of another IL wears.
These and other facts led the com
mission to state it was satisfied the COM
pany would be amply protected If dur
ing the ensuing IL months, at least It
should materially reduce the amount
going into the fund through charges to
operating expenses. w