Evening star., 1933-09-18
CAR MERGER PLAN
GIVEN BY HANNA
Traction Head Says 100000
Shares of Stock Would
Have $10O Par Value.
CONTINUED From First Page.)

Continued From First Page)
the Washington Railway and Electric
Co. will turn over all its rail properties,
including among other things the Glen
Echo Amusement Park.
AS part Of the agreement, the new
company is to enter into a power con-
tract with the Potomac Electric Power
Co., and the details OF this contract
also were furnished by Mr. Hanna.
The new company Is to pay s445
600 per annum to the power company
for $4,000 900 kilowatt hours of elec-
trical energy. This price is based on
the assumption it will take between
60 O0O. 900 and 80 O00, 900 kilowatt hours
to run the cars to be operated. II, for
any period of three months, it takes
more than the minimum or less than
the maximum, then a supplementary
rate is to be set up by agreement. SUBJ
ject to control Of the Utilities Com
mission.
The price named also is based on
the theory that the average price OF
coal delivered to the power company s
plant will be $4.20 per long ton If in
any month the price changes upward
or downward then the basic price for
power likewise will change according
to formula which consists of dividing
the number Of kilowatt hours used in
any one month by 1880 and multiply
ing the quotient by the difference in
dollars above or below the basic $4.20
per ton price.
Provision for Lease.
The Washington Railway g. Elec-
trio Co. is to lease to the power COM
pany without charge all property usel
for supplying electrical energy to the
railway company and the power COM
pany will maintain the property, taxes
and insurance excepted.
The contract is to run for five years
unless previously ordered changed by
the commission.
B M. Bachman. accountant for the
commission, testified the cost of the
power delivered at the bus bar to the
railway company was 5.66089 mills.
The items of this cost he gave as:
Generation; 2.s!45 mills: maintenance.
.30278 mills: real estate tax. .07l88
mills; franchise tax, .l0430; deprecia
tion. 35269; and return ON investment.
.19l379.
Peoples Counsel Richmond B. Keech
said he had examined both the merger
agreement and the power contract aEd
was satisfied with them. William NICK.
Clayton, representing the Federation OF
Citizens Associations. entered an OBJ
lection to the fact that the stock In
the new company is to be issued at par,
on the ground that traction stock gen.
orally now is below par.
Joseph w. Cheney, who said he has
been a street car rider since 1875. en-
tered the blanket objection to every
thing before the commission. He said
that under the act of March 4, 1925
permitting merger between the two
companies. the merger must be the
work of the stockholders of the street
car companies He said the first merger
plan sent up to Congress was the work
of the owner of bus company and the
second was the work of the Public
Utilities Commission and therefore
there was nothing properly before the
commission.
His first reference was to Harley p
Wilson. owner of the Washington Rapid
Transit Co., who made an unsuccessful
merger attempt in 1929.
Mr.. Wilson was present at the hear
ing and smiled broadly when the refer
ence was made.
Power Purchase Provision.
The testimony by Mr.. Bachman
brought out that the new railway COM
pany Is to purchase power from the
Potomac Electric Power Co. at q rate
of 5:93 mills per kilowatt hour instead
of 81 mills per kilowatt hour, as an
nounced last week when major details
of the plan were sketched rerbally by
Gen. Patrick The railway and electric
company, which owns the power con-
Germ, has been paying for its power
service from its subsidiary. rate OF
28 mills per kilowatt hour. 1t was
brought out that this low rate is prac-
tically at cost except for an allowance
of Is cents q ton for the handling OF
coal needed in the production OF power
for this service.
In explaining the increase in the
power rate to the new company, as
compared with the rate now paid by
the w. r. & E., Gen. Patrick last week
explained that the purpose was to as
sure that the general users of power
in Washington would not be called upOr
to help maintain the railway concern
The rate set in the power contract was
predicated on the proposal to give the
power company per cent profit
This was arrived at arbitrarily, IN keep.
ing with court rulings that per cent
return on investment is to be regarded
as reasonable.
Z Per Cent Not Guaranteed.
During this explanation of the rate, 9
citizen attending the hearing arose tt
ask II 1t should be understood that the
power company was to be guaranteed
Z per cent return on its service to th'
merged railway company and Gen
Patrick said the merger plan did no
contain any such agreement.
Mr.. Hanna said the new compan!
would start business with approximate!
44500.000 working capital, representing
the net current assets Of the two pres
ant etrAek car connAniAa